In today’s Projo, Lynn Arditi and Mike Stanton report on the indictment of David R. Clark on charges of conspiracy and insurance fraud in connection to his role at Beacon Mutual, Rhode Island’s state-established workers’ compensation insurer…
A Rhode Island grand jury yesterday indicted a former top executive of Beacon Mutual Insurance Co. on charges of conspiracy and insurance fraud….Revelations earlier this year about unfair pricing practices and preferential treatment of some of the state’s big businesses tainted Beacon, which recently has been trying to regain the confidence of state political leaders and the business community.The word that keeps recurring in the description of the crime that Mr. Clark is charged with is “favoritism”…
The Beacon executives referred to in the indictment are “paid enormous sums of money to protect the public’s interest,” [Attorney General Patrick Lynch] said. “This is a betrayal of trust [involving] favoritism that has caused injury directly to small businesses across Rhode Island”….But if there is agreement that favoritism in the insurance business is a bad thing (whch I think there is), then why in the past year was the legislature trying to rewrite the law in a way that would have made Beacon Mutual’s ability to practice favoritism substantially easier — perhaps even making favoritism legal?
The Giuliani report, released in April, found evidence that Beacon gave breaks to some large companies with policies of more than $10,000….The Giuliani report also found that Beacon executives maintained a VIP list of about a dozen companies, some of which received favorable treatment that resulted in lower workers’ compensation rates….
The two counts of insurance fraud, which Lynch said involved “favoritism” of certain policyholders, include one count of insurance fraud and another count of conspiracy to commit insurance fraud….
The excerpts that follow are from Senate Bill 2009, sponsored by Senators Roger Badeau (D-Woonsocket/Cumberland), Dominick Ruggerio (D-Providence), Frank Ciccone (D-Providence), David Bates (R-Barrington/Bristol), and John Revens (D-Warwick), which would have established Beacon Mutual as an independent non-profit corporation. The bill was passed by the full Senate last year, but failed to pass the House. In these excerpts, the “corporation” and the “fund” both refer to Beacon Mutual.
1. Maybe I’m reading too much into this first point; however, the current law governing Beacon Mutual requires them to have a “protocol” for imposing higher rates on individual companies deemed to be risky…
(3) Notwithstanding any law to the contrary, the fund may establish and apply a premium surcharge protocol. The protocol shall provide for higher premium and surcharge payments by insured who present higher than normal risks within a class, including the ability of the fund to assess from time to time a premium surcharge of up to three (3) times its applicable premium rate, as it deems appropriate to further the public purposes set forth in this act…The legislature wanted to remove from the law the language requiring a formal and consistent protocol for setting surcharges…
(4) Notwithstanding any law to the contrary, the corporation may establish and apply a premium surcharge of up to three (3) times its applicable premium rate for policyholders who present higher than normal risks within a class.With the protocol requirement removed, wouldn’t the rule be the rule that anything goes, so long as it could be slipped past the Director of Business Administration?
2. The old law made no mention of being able to offer discounted workers compensation policies. The new law, however, would have allowed Beacon Mutual to grant discounts, again without legally mandating a consistent process…
The corporation may also establish and apply discounts to the policyholders who present lower than normal risks within a class.If this new version was in effect, wouldn’t Mr. Clark be able to offer a defense based on the fact that the law expressly gives Beacon the discretion to offer lower rates to preferred customers?
3. Beacon wasn’t going to be required to use the same “uniform classification system” for setting rates that other workers’ compensation insurers operating in Rhode Island would be required to…
The corporation shall not be required to adhere to the uniform classification system or uniform experience rating plan required under section 27-7.1-9.1 in effect from time to time after the approval by the director of the department of business regulation of the corporation’s own classification plan, experience rating plan, manuals, schedules and rules…Section 27-7.1-9.1 of Rhode Island law sets up the uniform classification system that all workers compensation insurers in Rhode Island (at the moment) have to use…
Sec. 27-7.1-9.1 (c) Every workers’ compensation insurer shall adhere to the uniform classification system and uniform experience rating plan as submitted to the director and which is presently in effect. The experience rating plan shall be the exclusive means of providing prospective premium adjustments based upon measurement of the loss-producing characteristics of an individual insured.What was the intended purpose of establishing two sets of rules, one for Beacon, and one for everyone else? Wouldn’t this allow for the possibility of Beacon hardwiring favors for their friends into a specialized classification system?
The questions are 1) Would the “favoritism” that David Clark is accused of practicing still be illegal if the legislature had gotten its way on Beacon Mutual in this past session and 2) Is there be some valid public policy purpose for the apparent loosening of Beacon Mutual’s rate setting procedure, or this case of the legislature looking to give an advantage to their friends? [Open full post]
Republican candidate for Attorney General William Harsch has released his four-point plan for attacking public corruption if elected Attorney General…
- The formation of a Public Corruption Unit within the Attorney General’s Office.
- Stiffer penalties for public officials convicted in corruption cases.
- Creation of a Joint Commission on Election Fraud with the Secretary of State’s Office.
- The implementation of an anonymous Public Corruption Tip Line.
This is the third set of specific policy proposals that Mr. Harsch has released as part of his campaign.
[Open full post]According to Edward Fitzpatrick in the Projo, Attorney General Candidate Bill Harsch has complained to the state Board of Elections about incomplete campaign finance reports filed by current Attorney General Patrick Lynch…
J. William W. Harsch, the Republican candidate for attorney general, yesterday sent a complaint to the state Board of Elections, accusing Democratic Attorney General Patrick C. Lynch of failing to fully report employment and/or address information for about 43 percent of those who have contributed to his campaign since 2003….The Projo provides some examples of donors who provided incomplete information…
Harsch cited a state law requiring that campaign-finance reports contain the name, address and place of employment of each person or source that contributes more than $100. Harsch’s campaign coordinator, Tom Shevlin, said Lynch’s campaign omitted employer and/or address information for 922 contributions dating to January 2003.
- Charles A. Blixt, who donated $250 to Lynch in December 2005, as general counsel/executive vice president of R.J. Reynolds Tobacco.
- J. Russell Jackson, who donated $1,000 in December 2005, as a lawyer who has represented Anheuser Busch as a partner in the Skadden, Arps, Slate, Meagher and Flom law firm.
- Peter H. Cressy, who donated $250 in December 2005, as president and CEO of The Distilled Spirits Council of the United States, an industry advocacy group.
- Brennan Dawson, who donated $250 in December 2005, as senior vice president of The Tobacco Institute, which represents major cigarette manufacturers in the United States.
Lynch said it’s “humbling” that thousands of people have donated to his campaign since 2003. “We’ve recorded every contribution that we’ve received and comply with every applicable campaign-finance law,” he said. “My opponent’s latest attack is just a desperate attempt to bring life to his stagnant campaign in the last 21 days.”But Rhode Island law is pretty direct on this matter. The relevant section is section 17-25-7(a)…
17-25-7 Contents of reports to be filed by treasurers of candidates and committees. — (a) Each campaign treasurer of a candidate, each state and municipal committee of a political party, and each political action committee shall keep accurate records and make a full report, upon a form prescribed by the board of elections, of all contributions received by it in excess of a total of one hundred dollars ($100) from any one source within a calendar year, in furtherance of the nomination, election, or defeat of any candidate or the approval or rejection of any question submitted to the voters during the period from the date of the last report, or in the case of the initial report, beginning on the date of the appointment of the campaign treasurer for state and municipal committees and political action committees and on the date a person becomes a “candidate”, as defined in Sec. 17-25-3(2) for individual candidates. The report shall contain the name and address and place of employment of each person or source from whom the contributions in excess of one hundred dollars ($100) were received, and the amount contributed by each person or source. The report shall be filed with the board of elections on the dates designated in Sec. 17-25-11. The campaign treasurer of the candidate, or committee reporting, shall certify to the correctness of each report.We can argue about whether these laws are good things or not, but it seems silly for an Attorney General to be arguing that he is complying with the law when he clearly isn’t.
And isn’t the office of Attorney General an office that should be filled by someone who pays attention to the details? [Open full post]
The comments to my most recent post on same-sex marriage rapidly branched off into discussion of a Westerly Republican politician who is, apparently, homosexual. Having not researched the man for myself, I won’t presume to offer analysis; I’ll merely explain that the initial question posed by a commenter, Bryan, was: “How can a man who lives with his male lover properly represent all of the values that I feel so strongly about.” Thus inspired to investigate, Bryan (and others) have discovered multiple questionable items in the politician’s past, such as frequent party switching, audience-specific dishonesty about his sexual orientation, and even a possible lie about having been in the World Trade Center on September 11.
Again, until I’ve had a chance to do the research, I’m not going to comment further on the specifics. A more broadly applicable question has emerged within the discussion, however, and it’s certainly one worth consideration. From commenter Rhody:
If somebody hadn’t raised a red flag over his being gay, would any of this other stuff (the party registrations, 9-11, etc.) have ever come out? Just curious.
If conservatives like Bryan start giving hetero candidates the same level of scrutiny (and raising red flags on legitimate issues), something positive will emerge from this debate.
Perhaps it’s my recidivistic naiveté, but I find it to be a curious notion that, while it would be unnotably legitimate for, say, a Republican to plumb the background of any given Democrat, it is somehow dubious of a citizen to do the same on the basis of significant moral and social disagreement. In the latter case, he who makes the inquiry opens himself to accusations of bigotry and intolerance; in the former case, he is merely pursuing political interests. Funny that raw political interests should be considered less suspect than an honest difference of opinion.
The reason, it seems to me, is that those who would make sexual orientation a protected class even when it comes to political disagreement do not wish to permit that opinions can differ. (And, of course, any number of current issues could be substituted for homosexuality.) But perhaps that’s yet another advantage of our political system: We can do political battle within the system without bringing irreconcilables into every debate and every vote.
Furthermore, perhaps that’s yet another indication of why our political system — particularly in Rhode Island — is currently so corroded and viciously polarized. In a healthier system, political (rather than ideological) opponents would ensure that every candidate’s background is plumbed, both in primaries and in general elections, thus allowing “innocent” investigation by those on both sides of the ideological divide.
To understand why universal coverage won’t work for a certain segment of healthcare delivery, consider a fictional extension to your auto insurance policy. You are given the option of buying “gasoline insurance”. Instead of paying for what you buy when you go to a gas station, you will pay a premium at the beginning of each week. In return for buying into the program, you can put up to $36 of gasoline into your car per week at any participating gas stations (after paying a $1 deductible).
The flaw in this system is obvious. If everybody puts their full allotment of gas into their cars each week, everyone will end up paying more than 35 dollars for 35 dollars’ worth of gas; everyone will have to pay for the cost of their gas plus the administrative costs of running the gas insurance program. Savings under this program are only possible if a large number of people consistently use less than their allotment of gas, but people who consistently use less than their allotment are unlikely to stay in the program.
The point is that insurance doesn’t work as a way for paying for something that is frequently used. I don’t think that that is too controversial a starting point…
Now, move to an example closer to healthcare. Consider dental insurance. Do you believe that everyone should visit their dentist twice a year for a cleaning? If so, for the same reason that it makes no sense to pay for gasoline through insurance, it makes no sense to pay for routine dental care through insurance. If everybody goes for their twice-a-year cleanings, paying for those cleanings through insurance offers no advantage over paying the dentist directly. Everybody’s dental premium could be dropped by the cost of two cleanings, people could use the premium savings to to pay for their cleanings, and everything would stay about the same (except of course for the insurance companies, who would lose out).
The dental example is very relevant; many current healthcare proposals involve using preventative medicine and regular check-ups to catch problems early when they are easier to correct. And if we are talking about regular, recurring care, just like with dental cleanings, it makes more sense to pay the provider directly (maybe with the help of a health-savings account) rather than through an insurance program. If preventative medicine is to be an important part of the public healthcare system, the design of that system must assume that everyone uses their full allotment for wellness care and check-ups and, therefore, that paying providers directly will be as effective and as efficient as paying them through insurance.
I still don’t think I’ve said anything too controversial. However…
What about the person that can’t afford the costs regular dental cleanings or wellness check-ups? Doesn’t the government have a responsibility to provide for them somehow? Isn’t that the real purpose of universal health coverage?
Certainly if you believe that preventative medicine is an important part of the healthcare system, providing for regular care for the poor is a concern, but it is not a question of how to offer universal healthcare insurance, but a question of how to offer healthcare subsidies. The difference, you ask? In an insurance system, everybody who is covered pays into the system. In a subsidized system, only some pay into the system based on their “ability to pay”; people towards the upper end of the of the ability-to-pay scale pay for both their own care and for the care of the people with less ability-to-pay, while people at lower end of the scale pay for only a fraction (down to 0%) of their own care. (Michael Kinsley discusses some of the differences between insurance and subsidies in this Slate magazine article).
But the fact that some people need subsidies to pay for regular, recurring careis not a reason to put everyone into a uniform, government-run universal system for delivering it. There is no medically justifiable reason to force people to spend their healthcare dollars in a certain way just because they are also the ones who are covering the costs of subsidies for others. If there are private insurance plans, or HSA’s, or direct fee-for-service plans that are preferable to the government plan (and experience shows us that there almost certainly will be better plans than the government plan — unless the government creates regulations to make them impossible) then why shouldn’t people be free to choose those other options for themselves?
Some people will provide an ideological answer to this question. They believe that everyone should be in the same system to make everything fair, or to remove a stigma of receiving subsidized payments, or because they believe that government programs are inherently superior to private ones. These are all terrible rationales for using universal health insurance to provide subsidies for wellness care. Once the designers of the healthcare system make anything other than delivering the best possible care using existing resources their top priority, it is unlikely that the system will deliver the best possible care.
If people are serious about providing regular wellness and early-intervention medicine to as many people as possible, it cannot rationally be done through a “universal” insurance system. This is the realm where health-savings accounts will be most effective. The insurance system should be reserved for accidents and illnesses and major costs that are truly unforeseeable.
Anchor Rising readers are invited to use the comments section of this post to give their own real time reactions to tonight’s Rhode Island Gubernatorial debate between Donald Carcieri and Charles Fogarty (WPRO 630AM, The Dan Yorke Show @ 4:45 pm).
Insightful comments, witty comments, and even comments that spin like a original Mercury astronaut undergoing initial training are all welcome, but personally insulting or crude posts will be deleted as soon as I see them.
The comments are open now!
On Monday, I attended a candidate’s forum sponsored by the Rhode Island Health Center Association. Federal candidates Lincoln Chafee, Jon Scott, Rod Driver, Sheldon Whitehouse, Patrick Kennedy and James Langevin; and state candidates Don Carcieri, Reginald Centracchio, Charles Fogarty and Elizabeth Roberts all gave answers to questions about health care asked by moderator Bill “Rap Man”(*) Rappleye of WJAR-TV.
Felice J. Freyer reported on the forum in the Projo. The tone of her article suggests that, taken as a whole, she wasn’t exactly blown away by the answers to the questions that she heard…
Given impending cuts in Medicaid on the federal level, Channel 10 (WJAR) political reporter Bill Rappleye asked, would you use state money to fill the gaps, or would you prefer to increase fees or limit eligibility in a state-run health program for the poor and disabled….Mr. Freyer quotes Sheldon Whitehouse’s call for universal coverage of some sort…
Of the 10 candidates at the Rhode Island Health Center Association’s annual meeting, only one or two (depending on how you take their answers) would go on record favoring either of these unpopular options.
Governor Carcieri, a Republican who is running for reelection, said he has appointed a team to look for ways to save money in Medicaid….Rodney Driver, an independent running for U.S. House in the second district, against U.S. Rep. James Langevin, favored having the state make up any federal losses in Medicaid funding. The state can do this by cutting back on waste, fraud and abuse within the budget, Driver said.
The other candidates did little more than decry the Medicaid situation. Medicaid, which is financed jointly by the state and federal governments, is a growing portion of state budgets as medical costs increase and the number of uninsured people grows.
There were few specific, direct answers to any of the three questions posed to each candidate….
It’s a system that is screaming out for reform….We simply have to get universal coverage.Former Attorney General Whitehouse wasn’t the only Democrat at the forum who supports a so-called universal solution. Congressman Langevin and Senator Roberts both mentioned the goal universal health care in their responses. Congressman Kennedy talked about healthcare as a moral problem. And Lieutenant Governor Fogarty has put forth a proposal for mandatory health coverage for all Rhode Islanders as part of his campaign.
The unanimity on universality may be the cause of the lack of specifics that Ms. Freyer decries, at least on the Democratic side. Democrats invoke “universal health care” like the words themselves are a magical incantation that will solve the problem. (To be fair, Congressman Langevin does have specific ideas about extending the health plan offered to Federal employees to all citizens, and Lieutenant Governor Fogarty has put forth a plan similar the Massachusetts mandatory-coverage plan that is detailed in its implementation, if not in how it will be funded). But when Sheldon Whitehouse, or Patrick Kennedy, or Elizabeth Roberts use the term “universal”, we don’t know quite what they mean, because universal coverage can mean many different things…
- At one extreme, universal coverage could mean a single-payer, government run system where government insurance is the only health insurance allowed and supplemental insurance is made illegal.
- At the other end, universal coverage could also mean a government run system as a base, with people allowed to purchase additional coverage from a private system. (I think, for example, this is what a country like Australia does).
The second idea, while blunting the effects of rationing in theory, would most likely lead to a system with some people being stuck in a poor-quality government program, others paying for better quality private coverage, and a never-ending political tension for new “funding formulas” to transfer more resources into the government program. In short, government would do to health care what it’s done to public education over the past forty years.
The important thing to bear in mind is that the mixture of public and private in any healthcare reform is not a “detail that needs to be worked out”, it is a choice that needs to be made up front. Politicians who favor universal care need to be honest with the public about exactly what they are proposing…
(*)I’m just reporting how the hosting organization referred to their esteemed moderator. [Open full post]
(UPDATE: The first paragraph of this post has been modified to reflect RI Future’s timely correction of their original post.)
Over at RI Future, they are attempting to propagate the progressive fever-swamp fantasy they repeated the erroneous assertion (since corrected) that the Military Commissions Act affects the right of American citizens to petition for a writ of Habeas Corpus. As we’ve explained here and here in detail, it’s not true. The MCA applies only to aliens, not citizens.
And while we’re on the subject, is there anybody on the progressive left willing to join the long-term campaign to help bring about the right of citizens in North Korea or Iran to petition their own governments for Habeas Corpus, or do the progs regard those issues as “none of our business”?
Two for the price of one:
Question 7: Fort Adams State Park Recreation and Restoration Bonds
Approval of this question will allow for the State of Rhode Island to issue general obligation bonds, refunding bonds, and temporary notes in an amount not to exceed $4,000,000 for improvements to the Fort Adams State Park in Newport.
Project Costs – $3,984,000 in principal w/ $2,962,865 in Interest (6% over 20 years) plus approximately $28,000 in issuance costs. TOTAL: $6,974,764. {Source PDF}.
The ProJo says no and thinks that the City of Newport and private groups should step up to the plate on this one. I’m not very familiar with the technicalities of state vs. municipal funding, but, given that Fort Adams a “State” Park, I don’t know if this is possible. I’ll have to assume it is.
Question 7: Department of Environmental Management Bonds
Approval of this question will allow for the State of Rhode Island to issue general obligation bonds, refunding bonds, and temporary notes in an amount not to exceed $3,000,000 for the Local Recreation Development Program.
Project Costs – $2,988,000 in principal w/ $2,222,149 in Interest (6% over 20 years) plus approximately $21,000 in issuance costs. TOTAL: $5,231,073. {Source PDF}.
The ProJo opposes it for sound reasons: its really all for local projects to benefit individual communities–something this bond and the Fort Adams have in common–and the administration of the funds is a mystery. Besides, as emphasized by the ProJo:
[Open full post]….maybe without the handout from the state, school committees and other negotiators would drive better bargains with their unions.
Help the Animals…but wisely!
Question 6: Roger Williams Park Zoo Bonds
Approval of this question will allow for the State of Rhode Island to issue general obligation bonds, refunding bonds, and temporary notes in an amount not to exceed $11,000,000 for improvements to the Roger Williams Park Zoo in Providence.
Project Costs – $10,956,000 in principal w/ $8,147,880 in Interest (6% over 20 years) plus approximately $77,000 in issuance costs. TOTAL: $19,180,602. {Source PDF}.
Noting that the zoo is Rhode Island’s most visited attraction, the ProJo supports this bond, despite some questions regarding the zoo’s administrative apparatus.
Several years ago, the Providence parks superintendent, Nancy Derrig, retired after a controversy involving irregular administrative methods meant to insulate the park from a municipality that regarded the zoo’s admission fees as a convenient cash cow. Clearly, the zoo (and the park) are what they are now because Ms. Derrig took risks to protect them from city politics.
Today, this has changed. The city pays the Rhode Island Zoological Society to run the zoo, which no longer has much administrative contact with the city — or with its most logical alternative parent, the state. The arrangement seems a bit too unmoored from responsible authority for so important a civic institution.
…. The money’s disbursement would be administered by the Rhode Island Department of Environmental Management, which would funnel it through the city bidding process into contracts to carry out the zoo-expansion program designed by the Zoological Society.
In spite of the zoo’s unsettled administrative status, we support the bond issue, which would help fund its $35 million plan to upgrade existing exhibits, to create new ones and to boost its research facilities…
Approval of the bond issue would create momentum to give the zoo to the state, which can exert oversight and serve as a responsible parent for one of Rhode Island’s — and, indeed, southeastern New England’s — greatest treasures. So please vote yes on Question 6.
My family has a season pass to the zoo and visit frequently. It hasn’t been the same since the polar bears died, but renovation is underway and it is still an enjoyable experience. It also generates $13.5 million annually for the state. I’m not crazy about having the DEM administer the money by “funnelling” it through the “competitive” bidding process. Also, this bond is only a portion of the money required, according to The Rhode Island Zoological Society:
In addition to money from the $11-million bond issue, zoo officials hope to finance the project with $4 million already secured from a 2004 bond issue and $20 million in private donations.
Officials said $6 million in private donations has already been raised.
The RI Zoological Society believes these improvements are necessary to maintain the “bang for the buck” that the state gets from the zoo. However, it strikes me as more fiscally responsible to shore up the few leaks in the zoo–get more polar bears!–rather than embarking on a grand and expensive reimagining of the zoo. Use the already appropriated bond money and the private donations to deal with the top priorities. Save the wishlist–and the taxpayer dollars–for a more propitious time. If you want to help the zoo out, donate!
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