Governor vetoes changes to health-care risk pool oversight

Gov. Kelly Ayotte vetoed bills Friday involving public-sector risk pools, which are the nonprofit organizations tasked with helping public schools and municipalities provide health insurance and benefits for their employees.

Employee health insurance coverage is typically the most expensive part of school and town budgets after salaries, and risk pools allow their member organizations to share their money and pay out all their claims, even for employees who need expensive care.

Last year, SchoolCare, one of the largest public-sector risk pools in the state, faced a $4.5 million deficit. It issued one-time assessment fees in October to stabilize and replenish its reserves.

Many members struggled to pay the unexpected bills. Nine public school systems were assessed for more than $1 million. Some communities responded by raising property taxes. At least one district, Somersworth, cut some staff partly because of their bill.

The Legislature produced two bills to alter risk pool regulations and discussions revolved around SchoolCare’s difficulties last year and New Hampshire Interlocal Trust claiming insolvency the year before that.

Ayotte vetoed both bills.

In a statement Friday, Ayotte said House Bill 1491 diluted oversight by allowing risk pools to choose their regulator. She also said Senate Bill 661 placed an arbitrary cap on their reserves and mandated immediate changes across the state.

“As we have seen from recent risk pool failures, this is an important policy area to get right and these proposals need more work. For those reasons I am vetoing HB 1491 and SB 661,” Ayotte said.

The two major public-sector risk pools in the state responded positively to the vetoes.

SchoolCare officials said Monday that they were pleased to continue receiving oversight from the Secretary of State’s Office. HB 1491 would have allowed pools to choose the state Department of Insurance as their regulator instead.

Meanwhile, HealthTrust Executive Director Scott DeRoche said he was grateful SB 661 was struck down. It would have required HealthTrust to lower its reserves levels from 33% of member premiums by about 10% to 15%, bringing them more in line with SchoolCare.

DeRoche previously said higher reserve levels have allowed HealthTrust to avoid the financial issues affecting the state’s other public risk pools in recent years.

“We now know the law governing risk pools in New Hampshire will remain unchanged for the near future. In vetoing both bills, (Ayotte) avoided the disastrous consequences that would have resulted if only SB 661 were to pass,” DeRoche said.

What’s next for risk pools in NH?

Margaret Byrnes, executive director of the nonpartisan New Hampshire Municipal Association, said her organization continues to be concerned about the financial issues faced by public risk pools in recent years, as well as the state’s approach to regulating them.

“The impacts of the SchoolCare assessment are still to be seen,” Byrnes said. “One of the tough things is quantifying the state policy impacts on local governments. … It takes time to play out and the result doesn’t always show the connection.”

States regulate public risk pools in a variety of different ways, but New Hampshire is unusual in giving its Secretary of State’s Office oversight, Byrnes said.

Byrnes said the outcome of an ongoing legal battle between SchoolCare and one of its members would shape future legislation on the issue.

SchoolCare still hasn’t collected the full $30 million in payments from its member organizations since October. The Dover School District was assessed for $1.7 million and hasn’t paid. Dover is challenging the risk pool’s authority to impose assessments in court.

The district and its legal representatives argue SchoolCare is bound by its bylaws and state statutes to not assess its members. If the case ends in their favor, it would allow all 90 SchoolCare members to seek damages from the organization.

Secretary of State David Scanlan disagreed when the Portsmouth City Council made a similar argument to challenge the city’s education department’s $1.57 million assessment in March.

Scanlan’s office moved to have the Dover School District’s lawsuit against SchoolCare dismissed from Superior Court in May, claiming jurisdiction in the dispute as regulator of public-sector risk pools.

The judge has not ruled on that challenge yet and there have been no further developments in the case.

SchoolCare was ordered to continue paying health claims filed by Dover school employees through the end of the school year, before the district switches to a new brokerage in July.

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