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Local Government Center Rhetoric Does Not Match Reality

An emergency board meeting of the Local Government Center was held last week in regards to dealing with the implementation of the Hearings Officer’s Order (Final Order) in the matter of the “State of NH vs. Local Government Center et. el”.  A statement from the Executive Director was issued post meeting.

The Executive Director claims (LGC ED Message) that the requirement to purchase reinsurance will add $5 million to the rates. A look at the financials suggests otherwise. Page 5 of the 2011 financials (2011 Audited Financials ) notes two things, first that there are no claims over $1million dollars (minimizing the cost of reinsurance) and second an actual cost of ½% of contributions for reinsurance . Based on the current health insurance contribution of 400 million dollars, this equals a cost of approximately $2 million, not $5 million as overstated by the Executive Director.

“Here is where the rhetoric falls far short of the reality. Just look and compare the financials 2010 to 2011, it appears the LGC reduced the amount of dollars for reserve by 18% from the previous year, and then they further collected 4% more in contributions while experiencing an increase in claims cost of only 1%*. What does this mean to those paying the bills? The LGC kept more money, while their net assets (surplus) grew by 19% or $20.5 million,” stated Dave Lang, President of the Professional Fire Fighters of NH.

“The management of the Local Government Center would have us all believe that in order to save us $2 million or $5 million for that matter in our rates they need to keep $106,155,206 the 2011 net asset balance. NH citizens expect a level of transparency when it comes to their local governments. These repeated actions by the Local Government Center defy on all accounts that expectation,” continued Lang.

An excerpt found on page 5 of the 2011 Financials

LGC HealthTrust purchased stop loss excess coverage to help defer the impact of large claims. LGC HealthTrust retained the first $1,000,000 of each claim through June 30, 2010; the stop loss carrier reimburses amounts above that level. LGC HealthTrust paid .5% of contributions for reinsurance. HealthTrust eliminated the purchase of stop loss reinsurance as of July 1, 2010. The Board asked the actuary to assess the risk of the elimination of this coverage. The actuary’s opinion noted HealthTrust had not sustained a claim over $1,000,000. The actuary also noted HealthTrust’s level of Risk Based Capital and size gave it the ability to eliminate this coverage and the resulting cost of purchasing reinsurance. Eliminating the purchase of reinsurance reduces the cost of coverage to member groups.

*A calculated explanation of President Lang’s explanation with page references found in the 2011 Financials (web link provided above):

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The New Hampshire Labor News is a group of NH Workers who believe that we need to protect ourselves against the attacks on workers. We are proud union members who are working to preserve the middle class. The NHLN talks mostly about news and politics from NH. We also talk about national issues that effect working men and women here in the Granite State.
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