Local Government Center Hearings Continue

The Legislative Committee hearings on the Local Government Center (LGC) continued on Wednesday. Two people testified. Diana Lacey president of the State Employees Association and Phil Wilson a selectman from North Hampton.

Lacey brought up a number of interesting points, including why the LGC should be allowed to have an exclusivity agreement with Anthem that prevents communities and government entities from purchasing insurance from Anthem unless they go through the LGC. 

Lacy also brought up the issue (which hopefully has been resolved as a result of the administrative officers final order) of Health Trust dollars being used for lobbying. Before the final order Health Trust members were forced to join the New Hampshire Municipal Association (NHMA) the lobbying arm of the LGC.

The more interesting testimony from my perspective came from Phil Wilson, the select board member from North Hampton. Wilson has a background in Human Resources and has worked for a number of large corporations, including Oracle.

He reiterated many points that were brought out during the 10 days of administrative hearings last year. Concerns about commingling of funds, concerns about inadequate explanations of rates, concerns about whose interests the LGC was representing, theirs or their members.

But the point that really caught my attention was an extension of the testimony last week from Albert Jones of the Interlocal Health Trust. That it is the composition and quality of the board of directors that is the most important component of whether or not a pooled risk management program like the LGC will be able to meet their responsibilities to their members.

Wilson was very critical of not only the boards recent actions of hiring an executive director and CFO who appeared to have more political insight than insurance knowledge, but he also challenged the boards ability to even find and interview qualified candidates. Wilson felt that without board members having knowledge of the insurance industry there was little opportunity for them to pursue and hire candidates with the knowledge to run the Trusts.

Wilson once again pointed to the recent hires of George Bald and Peter Bragdon as examples of a company more interested in their image than in hiring executives who have the knowledge to run their Trusts and serve their members interests.

One of my concerns has been how do you have board members who also represent their towns serve two masters. I’ve asked, are they looking out for the best interests of their communities or the LGC? But as Wilson pointed out to me their should be no conflict. RSA 5-B:1 is very clear about the purpose of the establishment of pooled risk management programs. 

This is what the RSA has to say:

5-B:1 Purpose. – The purpose of this chapter is to provide for the establishment of pooled risk management programs and to affirm the status of such programs established for the benefit of political subdivisions of the state.

The LGC’s Trusts are there only for the benefit of the communities they serve. Not for the expansion of the LGC’s share in the marketplace  or the perceived needs of the LGC to be able to shape legislation and change laws that put the LGC’s interests ahead of those of their members.

So when I asked Wilson what he would do to ensure that there was no conflict of the board members loyalty between the Trusts and their communities, he stated all that was necessary was for the LGC to obey the law.

Similar to what we see here in Concord city government, we have seen the same situation with the LGC. The tail is wagging the dog. Rather than the board setting policy and directing the executives to carry out that policy, we see LGC lawyers and directors shaping policy and asking the board members to apply that rubber stamp.

So how is this avoided in the future? What needs to be done? Do laws need to be changed, rewritten? Should the insurance department have oversight instead of the Secretary of States office?

Not according to Jones or Wilson. They feel that all that is necessary is determining a method that ensures you have a board of directors with knowledge of the insurance industry and pooled risk management programs. While not excluding representatives from member communities they feel there should be a method for allowing and attracting board members from outside the member communities with the expertise to ensure that the LGC meets its obligations to their members within the provisions of RSA 5-B.

Next week Primex and School Care testify before the legislative committee. Then the real work starts for the committee. What to do, if anything. Wait until the New Hampshire Supreme Court rules on the LGC’s appeal or move forward with new rules.

Should the legislature define more specifically the composition of the board of directors and how the board members are appointed? Should the law define the activities pooled risk managed pools are allowed to pursue? Should they define what activities are not permissible? Or does RSA 5-B already define what is and isn’t permissible as currently written?