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New Hampshire Views: Little sympathy for Property-Liability Trust

Free-market advocates like to say that the market should decide which business entities survive and which don’t, though many sang a different tune in 2008 when some of their favorite financial institutions were about to go under and the federal government stepped in with bailout money.

Still, laissez faire capitalists tend to believe that the marketplace should pick winners and losers free from the pesky intrusion of government regulation.

New Hampshire may be about to get its own lesson in marketplace economics, as lawyers for the Property-Liability Trust Inc. warned on Monday that the PLT will be financially insolvent unless the state Supreme Court refuses to postpone a $17.1 million payment that the state has ordered be repayed to HealthTrust, one of PLT’s sister entities under the former Local Government Center umbrella.

HealthTrust, which operates a lucrative health insurance pool for cities, towns and school districts across the state, is owed the money because a state hearing officer ruled last year that it illegally subsidized PLT’s struggling worker’s compensation programs with money from the health insurance pool.

The state ordered PLT to repay HealthTrust, but PLT lawyers say the money’s just not there and a Dec. 1 deadline looms.

HealthTrust, meanwhile, has appealed the hearing officer’s ruling to the state Supreme Court, and PLT officials are hoping the court won’t force them to make the $17.1 million payment that’s due on Dec. 1.

One would think that PLT – being in the insurance business – would just do what most insurance companies would do in a similar situation and raise the rates they charge their customers – school districts and municipalities – for worker’s compensation insurance. PLT lawyers, however, argue that the law governing risk pools prevents that from happening in this instance.

State officials are skeptical.

PLT officials also say they can’t get a loan to cover the HealthTrust payment and are looking at insolvency if the deadline holds.

Wendy Parker, PLT’s director, said member cities and towns will not renew contracts and PLT would “cease to be a going concern.”

It’s hard to feel much sympathy for PLT, especially since the organization’s status as a going concern might have been called into question long before now, but for the fact that it was being subsidized by money from HealthTrust.

Under the umbrella of the former LGC, demand for its health insurance products made HealthTrust a financially robust entity, while demand for PLT’s worker’s compensation insurance was not as strong.

Faced with an underperforming entity, the LGC, according to state regulators, broke the law by using money that people paid for their health insurance premiums to support something those people didn’t pay for – worker’s compensation insurance.

The situation that PLT now finds itself in is simply the marketplace at work. If PLT goes under and the demand is there, another carrier will come along to fill the void in the worker’s compensation insurance market.

Meanwhile, cities, towns and school districts also ought to be asking themselves whether they should continue doing business with HealthTrust, given the ethical questions that have been raised about the hiring of CEO Peter Bragdon – a state senator – and the fact that, in its previous incarnation, the health insurance pool was also a party to the LGC’s machinations.

And therein lies the beauty of the markeplace: Those municipalities and school districts could pull their taxpayer-funded health insurance premiums out of HealthTrust by not renewing their policies.

They could take their business elsewhere.

Has the LGC ever heard of "optics" - or don't they care how it looks if there's enough money at stake?

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