Sen. Sharon Carson (R-Londonderry) has proposed a new way to settle the JUA controversy.

Senate Bill 170 first forbids the state from claiming any surplus funds from the Joint Underwriting Association — either through legislation or taxation. It also orders that any “excess surplus” funds be distributed to policyholders. That excess measures at least $110 million, according to the bill. And that $110 million is at the core of the two-year controversy.

A House committee will hold a public hearing on SB 170 Tuesday.

the backstory

The JUA (officially known as the New Hampshire Medical Malpractice Joint Underwriting Association) is an otherwise unknown structure. Founded in 1981 by the N.H. Legislature, it was designed to help doctors, hospitals and other medical providers find affordable medical malpractice insurance through a state-administered not-for-profit agency.

Over the years, plenty of money has built up at the JUA from premium payments made by policyholders. The fund goes beyond a prudent reserve, some say, to the point of having “excess” surplus funds.

The JUA became a political flashpoint in 2009, when Gov. John Lynch and Democratic budget writers tried to transfer $110 million in surplus JUA money into the state’s general fund to help balance the budget for 2010 and 2011.

As we noted in an earlier post on SB 170, JUA shareholders were joined by Republicans in fighting the transfer, saying lawmakers had no right to the money. The Lynch administration countered that the people had a right to benefit from the surplus JUA funds because the state had established the entity in the first place.

Eventually, the JUA won a lawsuit that reached the N.H. Supreme Court. In its ruling, the Court said the tax-exempt JUA is a private agency, even though the IRS allows it to function within state government.

the new story

Senate Bill 170, sponsored by Sen. Sharon Carson (R-Londonderry), codifies the court’s ruling and goes a step further by prohibiting any possible taxation on the funds. It also orders that the current excess be distributed among shareholders, effectively emptying the cookie jar.

In a full Senate vote, even Democratic members who had formerly supported the Lynch administration’s stance on JUA supported SB 170 as it passed by a 23-1 vote. Sen. Lou D’Allesandro (D-Manchester) was the sole objector.

If SB 170 passes, that won’t mean that the JUA controversy itself is anywhere near over. Check out this Foster’s article on continued legal fallout.

Q&A

Is it about time for SB 170? Or does it go too far in prohibiting any possible taxation on the JUA’s surplus funds? And is it for the Legislature or the courts to order that excess money be distributed to shareholders?

Let us know your thoughts using the comments box below. (Comments Policy)

>> Tuesday, April 19, 10 a.m., House Executive Departments and Administration Committee public hearings on SB 170 and other legislation. An executive session is scheduled at 1:15 p.m . (Legislative Office Building, Room 306).

This Daily Dispatch was written by Michael McCord, with contributions from Hilary Niles.

The Senate Executive Departments and Administration Committee will hold a public hearing Thursday on Senate Bill 170, sponsored by Sen. Sharon Carson (R-Londonderry). The bill would prohibit the state from using any JUA funds and allow the organization to distribute surplus funds back to shareholders — medical providers who buy their malpractice insurance policies through the JUA.

The political controversy erupted in 2009 when Gov. John Lynch and Democratic budget writers tried to transfer $110 million from the JUA into the state’s general fund to help balance the budget for 2010 and 2011. The move became a political flashpoint as JUA shareholders were joined by Republicans in fighting the transfer, saying lawmakers had no right to it. But, the Lynch administration said the people of New Hampshire had established the JUA and had a right to benefit from those surplus funds.

The JUA sued and won. The N.H. Supreme Court essentially said that the tax-exempt JUA is a private agency, even though the IRS allows it to function as a tax-exempt part of state government. A bid to change JUA rules last fall through the state insurance department, which administers and appoints board directors to the JUA, also ran into resistance by a joint legislative committee and was eventually abandoned.

The JUA was founded in 1981 by the Legislature to help medical providers find affordable medical malpractice insurance through a state-administered non-for-profit agency. Senate Bill 170 proposes that any of its excess funds be distributed to shareholders after all tax liability issues have been settled. Any excess funds that have not been distributed “shall be used to provide grants in aid to health care providers servicing medically underserved populations to assist in the NHMMJUA coverage.”

Already, eight senators and four representatives have joined Sen. Carson as co-sponsors of SB 170.

>> Thursday, Feb. 10 — Public Hearing of SB 170 before the Senate Executive Departments and Administration Committee, Room 100 at the State House, 9:50 a.m. Executive session may follow.

>> You can find out more about SB 170 in a recent New Hampshire Business Review story and read state Insurance Commissioner Roger Sevigny’s explanation of how NHMMJUA works and his defense of using the agency’s funds by the state here.

This Daily Dispatch was written by Michael McCord.

Front Door Politics will keep up on the pulse of New Hampshire's health care and insurance debates this year.

Stopping federal health care reform is the goal of at least seven health care-related bills that will be considered when New Hampshire’s 2011 legislative session opens Jan. 5.

Today, we continue our survey of newly proposed laws with a snapshot look at the health care bills and some particular developments to keep an eye on.

No Thanks, Mandates

The most (in)famous health insurance mandate right now is the individual mandate portion — requiring people to purchase health insurance — of the recent federal health care reform law. Plenty of energy is now being garnered to derail this aspect of the 2010 Patient Protection and Affordable Care Act.

On the House side, Rep. Neal Kurk (R-Weare) has proposed a bill that would mandate the state to opt out of the federal act. Rep. Steve Vaillancourt (R-Manchester) has filed legislation requiring the state attorney general to join a lawsuit by other states (all with Republican attorneys general) to stop the reform bill on constitutional grounds.

On the Senate side, 14 senators have sponsored legislation similar to Vaillancourt’s.

One common topic in New Hampshire’s ongoing health care and insurance debates is the requirement that insurance companies cover a range of specific health conditions — ranging from mental health services to pregnancy to bariatric surgery. Current proposals on this topic will become more clear when the full text of all proposed legislation is made available next month.

Fine Print

Six Republican House and Senate members — including the father and son team of Reps. Marshall and Matthew Quandt of Exeter — are proposing new bills that would establish “a committee to study contract negotiations between health insurance companies and health care providers.”

The Quandts need to look no further than the very public and acrimonious negotiations between the state’s largest insurer, Anthem Blue Cross and Blue Shield, and Exeter Health Resources, the parent company of Exeter Hospital. The current contract between the two expires Dec. 31 and negotiations are at an impasse. (You can read all about it in the Portsmouth Herald here.)

Crossing State Lines

Individuals and some businesses would be allowed to purchase health insurance from out-of-state carriers according to a bill proposed by Sen. Jeb Bradley (R-Wolfeboro). With no less than 14 fellow co-sponsors from the Senate, this near-perennial topic promises an interesting debate this year.

Fluoride Check

Rep. Lars Christiansen (R-Hudson) has proposed legislation to establish “a committee to study the health and environmental effects of using industrial-grade silicofluorides and industrial-grade sodium fluoride for water fluoridation in New Hampshire.”

The last major overhaul on water fluoridation came in 2004 with Senate Bill 449, which put in place procedures for communities to vote on whether or not to allow fluoridation of public water supplies.

This Daily Dispatch was written by Michael McCord, with contributions from Hilary Niles.

>> Tomorrow we will take a look at a wide range of social issues, including gay marriage, abortion, death penalty and medical marijuana.

Hospitals will make their case today to the Commission on Health Care Cost Containment.

The Commission on Health Care Cost Containment stemmed from Senate Bill 505, which passed earlier this year. Members are charged with creating a first-of-its-kind study of general health care costs in the state. The commission lost the two Democratic legislative members — including SB 505’s main sponsor, former Sen. Maggie Hassan of Exeter — in the November elections and their replacements will be named today. There are 11 commission members including four elected officials: two from the House and two from the Senate with equal political party participation. (You can read our earlier dispatch about the commission here.)

Hassan told Front Door Politics that she has been asked to “stay involved” with the commission by Chairman Phil Steiss, but she’s not sure what form that will take.

“I plan to attend meetings as a member of the public and give my two-cents worth from time to time,” Hassan said. The long-term goals of the commission include:

• promoting health insurance competition in the state
• reducing or eliminating payment differentials to hospitals and health care providers
• fairly allocating the burden of charity care
• promoting public access to cost information
• and containing the increase in health care costs

The commission, which heard from health insurance providers in November, is studying the health care reimbursement system throughout the state along with the impact of federal health care reform — which in itself may be in legal limbo after a federal judge in Virginia ruled Monday that it’s unconstitutional to mandate the purchase of health insurance. The commission will also investigate options for implementing a common payment system for hospitals, and seek methods for incentives that will enhance better health care quality and efficiency.

The commission is expected to hear testimony today from the New Hampshire Hospital Association and the non-profit New Hampshire Citizen’s Health Initiative. The commission will issue a final report by July 1, 2012.

This Daily Dispatch was written by Michael McCord.

>> Commission on Health Care Cost Containment will meet in Room 100 in the State House on Tuesday, Dec. 14, at 9 a.m.

(photo by Hilary Niles)

He’s part of a legislative study committee whose job is to figure out how to add a forensic psychiatric wing to New Hampshire Hospital—and fast. The goal is to divert patients from the state prison’s Secure Psychiatric Unit, where they are currently held alongside convicted criminals. The committee was formed last year with the passage of House Bill 1602, sponsored by Rep. Robert Cushing (D-Hampton).

The need for the new facility, according to DiPentima, is urgent. He says the departments of Corrections and Health & Human Services are also pushing the issue, for both liability and medical reasons.

“The way it is now at the state prison is not a good situation,” he says. “You have a co-mingling of patients and it’s hard get proper treatment modalities.”

assigning beds

Forty of the 60 beds at the state prison’s psychiatric unit are used for patients who are not convicted criminals. According to DiPentima, this ratio was set by a court order in 2005 when 20 beds were set aside for convicted prisoners.

To be clear, those who are not convicted are nonetheless involved in criminal cases. They end up at the prison facility instead of N.H. Hospital by court order, such as for pre-trial evaluation or determination of sanity. This includes everyone from people with severe developmental disabilities to alleged sexual predators.

“I think there is potentially some liability for the state for not putting people in the right facility,” DiPentima says. “It’s important that we have the right facility and the space to properly place new patients. If not, the public could be at risk,” he says, due to a system that is backed up to the county jail level with patients in need of mental health treatment.

On top of this potential liability, the state is missing out on Federal Medicaid reimbursement funds for some of those patients because the unit is located at the state prison, according to DiPentima. This issue and general funding sources for constructing a new facility—including federal reimbursement and private charity—are part of what the study committee has been looking into.

finding money

DiPentima says, at a minimum, the committee will recommend that the Legislature set aside money from the 2012-2013 budget for the planning and design of a new wing at the state hospital. But, he’s not sure whether the new Republican-controlled Legislature, which is focused on budget cutting, will choose to go that route.

Already last year, with Democratic control of every chamber, mental health services saw significant cuts. According to this editorial from the Concord Monitor:

“Until recently, the state hospital had 200 beds for emergency patients. Today there are just 150 because of budget cuts. And in coming weeks, the hospital will lose 12 more beds [with the closing of the Anna Philbrook Center] to make room for troubled children. As a result, the state hospital is turning away patients in crisis—deferring admission until beds are available. The patients land in community hospitals and even county jails, for hours or days at a time.”

>> The final meeting of the Committee to Study Establishing a Secure Multi-Program Forensic Psychiatric Hospital will take place in Room 204 of the Legislative Office Building in Concord on Nov. 10 at 10 a.m.

>> The committee’s final report is due Nov. 30.

This Daily Update was written by Michael McCord.

Understanding the impact of health care economics is important given its growing influence across the economy. According to the N.H. Center for Public Policy Studies, personal health care costs made up 18 percent of the state economy in 2009. That’s double the amount from 1989, and it could grow to 25 percent or more in another 20 years.

The Commission on Health Care Cost Containment was originally designed as a permanent, three-member team funded by hospitals and insurers to review hospital costs. But, after significant political turmoil in the spring, Senate Bill 505 emerged in its final version as a commission charged with creating a first-of-its-kind study of general health care costs in the state. It passed the Senate 24-0 in March and the House 209-113 in April.

The commission chair and main sponsor of SB 505, Sen. Maggie Hassan (D-Exeter), said members will study the health care reimbursement system throughout the state. They will also examine the impact of federal health care reform, consider options for implementing a common payment system for hospitals, and look for ways to incentivize better quality and efficiency.

Hassan said their ultimate goals include promoting competition in health insurance, reducing or eliminating payment differentials to hospitals and health care providers, fairly allocating the burden of charity care, promoting public access to cost information, and containing the increase in health care costs.

The commission has 11 members, including two each from the House and Senate; two from the state departments of insurance and health and human services; and five public members with expertise in health care and small business, appointed by Gov. John Lynch. The commission’s activities are funded at $250,000 by a one-time assessment, with half paid by insurers and the other half paid by hospital and ambulatory surgical centers in proportion to their net operation revenue.

“Funding to support a professional staff with the background and qualifications to analyze complex health care financing data is essential to the commission’s success,” Hassan said earlier this year.

The commission will have its next regular meetings Nov. 16 and Dec. 14. Its final report is due July 1, 2012.

>> Commission on Health Care Cost Containment will meet in Room 100 in the State House on Tuesday, Oct. 19, at 9 a.m.

This Daily Update was written by Michael McCord.

A Committee of Conference has pieced together a compromise $3.2 billion general fund plan for the next two years, starting July 1.  These select members of the House and Senate reached the required unanimous approval for their report, but nothing guarantees their colleagues will go along with it. The full House and Senate are scheduled to vote on the budget—and dozens of other Committee of Conference reports—on Wednesday, June 24.

Meanwhile, a new lawsuit filed on the final day of budget negotiations seeks an injunction that would keep the Legislature’s hands off a critical $110 million it has claimed.  Gov. John Lynch and legislators plan to tap surplus funds from the NH Medical Malpractice Joint Underwriting Association. But over 200 JUA policyholders (healthcare providers and facilities) say the insurance money is rightfully theirs.

If the Belknap County Superior Court were to grant the injunction before the budget passes, the lost funding would send budget writers back to the drawing board.  That’s also where they could end up if either the House or Senate vote down the Committee of Conference report next week.

Shaping Up

More contentious than how to spend money in this debate has been how to raise it.  The Senate’s casino-style video slot machines were shot down by the House, which in turn lost its bet on the “gas tax,” and new levies on capital gains and estates.  A new tax on refinanced mortgages was also killed late in the game, and proposed suspension of the Business Enterprise Tax credit was defeated.  The NH Business and Industry Association claims a notch on its scorecard for the latter.

But the BIA is still licking a wound from a “mystery” amendment that it says amounts to double taxation.  This development, which was not revealed to the public in advance, passed the committee easily and is expected to bring in at least $15 million in new taxes from the state’s Limited Liability Companies.  According to Dept. of Revenue Administration Commissioner Kevin Clougherty, it merely closes a loophole that lets LLC owners off the hook for a 5 percent interest and dividends tax paid by other businesses.

Major spending cuts also helped close the $190 million budget shortfall. Some of what fell was a surprise to the NH Hospital Association.  Funding was lowered for medical education, which, coupled with the resulting loss of matching federal funds, will result in a $5.4 million hit for four teaching hospitals.  Another $6 million came from limiting Medicaid caseload growth to 1 percent.

More cuts will come from state employees.  The Legislature is not empowered to issue furloughs on its own, so Gov. Lynch will have to do that work, instead.  In addition to the 200 layoffs already approved, Lynch is now directed to negotiate layoffs and/or furloughs totaling $25 million with the State Employees Association and other unions.

The state will also scale back its contributions to municipal employee retirement accounts, from 35 to 25 percent in two years.  Those workers won’t lose money, but the contribution responsibility will shift to towns.

The Rooms and Meals Tax has also been bumped up from 8 to 9 percent, affecting customer tabs at restaurants, hotels, and now campgrounds. A similar style tax was proposed for all entertainment purchases, such as concerts, but that measure failed.  A new 10 percent tax on gambling winnings did make it through, along with a 45-cent tax increase on cigarettes.  Car and boat registration fees will double under the new plan, but toll increases stalled.  The committee also approved the sale of liquor at eight grocery stores in the state.

It wasn’t nickels and dimes that really balanced this budget, however.  A last-minute revision to expected tax revenue eliminated no less than $75 million in the budget shortfall.  And a move to bond $87 million in school funding took that much out of the operating budget, for a cost of $14 million in debt service per year.

Shaking Down

All in all, the $3.2 billion general fund is only about a third of the overall state budget.  With money from the federal government, education trust fund, highway fund and other sources, New Hampshire’s tab will come to about $11.6 billion in the next two years, combined.  Since those other sources are mostly dedicated funds for pre-determined spending, it’s the General Fund that gets the most attention.

The lion’s share of General Fund spending—nearly half—goes through the Dept. of Health and Human Services. General government costs follow at about one-fifth, with education and justice expenditures not far behind. The committee’s compromise budget includes a change that allows the Dept. of Corrections to implement a program designed to reduce criminal recidivism, thereby lowering inmate numbers and reducing personnel needs. Plans are already underway to close the state prison in Laconia.

A proposed 850-student cap on public charter schools has also been repealed, thanks to restoration of $6.6 million in aid to those schools.  The two-year moratorium on approving new charter schools remains in place, and state officials have been directed to investigate how future cuts in state aid to charter schools may affect New Hampshire’s standing with the American Recovery and Reinvestment Act.

New Hampshire’s Constitution requires a balanced budget. There’s no law, however, against using old numbers if you can’t figure out new ones.  If the conference committee’s budget fails, the Legislature would work off of the current (2008-09) biennial budget until a new compromise is reached.

The Senate will vote first on Wednesday, but opposition there remains strong among Republicans. This numbers game could last into summer.

Should the state lower spending, or start bringing in new money to balance the budget?
Share your thoughts below.

And remember, our online learning center and a complete list of proposed laws for 2009 is available here at Front Door Politics: from the State House to your house.

Since the mid-1990s, state law has restricted construction of new nursing home “beds” in New Hampshire, essentially preventing both private and county-run nursing homes from expanding their capacities.  The ban, called a “moratorium” in the 30 or so states that employ it, was set to expire this year.  House Bill 113 extends the restriction until 2013, but also adds a provision that makes it easier for nursing homes to upgrade existing beds.

New Hampshire’s moratorium on nursing home beds came into practice in the mid-1990s, but the practice has been utilized in other parts of the country going back to the 1980s.  The reason for limiting beds was, ironically, to keep prices down.

In the mid-1990s, she says, New Hampshire boasted a surplus of nursing home beds, yet paid one of the nation’s highest per capita costs per day for those beds.  Contrary to what one might expect, holding down a status quo on nursing home capacity in the state has not caused the price to spike even higher.  Instead, accompanied by other measures to help people stay in their homes longer, it actually has kept down the cost of elder care.  “It’s better for the client and the budget,” Wendelboe says.

Nursing home beds in the state are now at about 90 percent occupancy, a figure that also reflects the growth of assisted living facilities, which many people prefer to nursing home care.  As the Baby Boomer population continues to age, there will be a need for additional beds, Wendelboe concedes.  “But we’re not there yet,” she says.

One regulation legislators apparently are ready to ease is permission to upgrade, which currently hinges on a dollar-limit threshold.  Regardless of the number of beds a project might affect, if a nursing home wants to spend more than about $1.8 million on renovations, it must get permission from the Certificate of Need Board, which operates under the Dept. of Health & Human Services.  The board must grant permission where the renovations are necessary to meet the life safety code requirements.

So did the House Health, Human Services & Elderly Affairs Committee, which unanimously recommended its passage.  The House Finance Committee was also in full support, and the bill passed the House with no opposition.  Its public hearing in the Senate Health & Human Services Committee will be held Tuesday, May 19.

uniform child protection laws

There are not a lot of child abduction cases in New Hampshire, according to Rep. Foose (D-New London), “but there are more than just a couple going on at a time,” he says.  House Bills 694 and 695, he believes, will reduce confusion and increase protection in the state laws that dictate how to handle—and prevent—such cases.

HB 695, adopting the uniform child custody jurisdiction and prevention act, actually would repeal a similar act in favor of this more updated one.  It eliminates disputes over jurisdiction in the federal parental kidnapping law and contains new enforcement language, according to Rep. Edward Moran (R-Nashua).  Moran wrote in favor of both bills on behalf of the House Children & Family Law Committee, which unanimously recommended them for passage.  The full House chamber followed suit, and the bills go before the Senate Judiciary Committee for public hearing on Tuesday, May 19.

HB 694, adopting the uniform child abduction prevention act, is written to complement its partner.  It gives courts “clear guidelines for child abduction risk factors,” Moran writes, and “also provides effective preventive measures and gives protections to victims of domestic violence through confidentiality provisions.”

House Bills 694 and 695 represent “an important improvement,” Foose says, “not a radical change.”

Both bills, as their names suggest, stem from a move toward “uniformity” with the laws of other states. Specifically, they were born within the Uniform Law Commission, a 117-year-old nonpartisan national conference of lawyers from all 50 states, Puerto Rico and the U.S. Virgin Islands.  From New Hampshire, Attorney General Kelly Ayotte and attorneys Michael Dunn and Michael Ruedig serve as commissioners.

“They meet on a regular basis and look at laws across the country,” explains Foose, who says he is a big advocate of the commission.  “Where they think it’s appropriate to suggest uniformity (from state to state), they spend a lot of time working with individual legislators looking at particular laws and making recommendations,” he says.

The work of the commission spans a wide range of subjects, from children of assisted conception to international wills to employment termination.  Foose says that when it comes to matters of child abduction that cross state lines, uniform laws are helpful for both the parents and attorneys to not have re-learn a new set of laws for every state that comes into play.

Remember, our online learning center and a complete list of proposed laws for 2009 is available here at Front Door Politics: from the State House to your house.