The State of New Hampshire has seized $110,000,000 in private Medical Malpractice mutal funds to balance the state’s budget, according to Charles Arlinghaus, president of the Josiah Bartlett Center for Public Policy. The fund, like most mutual funds, was money set aside in case of loss — funds which rightfully and by state statute belong to those who have paid in, and should be returned to them, since the losses didn’t eat away that fund. There’s nothing shady or unusual about it. That’s the way that all mutual funds work.
When the governor announced plans to use the money to balance the budget, everyone wondered what secret honey-pot the government had, and why it hadn’t been heard of before. That’s because it isn’t the government’s money. These are privately owned funds, a high-risk insurance pool. The state doesn’t pay for it, pay into it, or administer it, though there is statute that allows for it, and that statute specifies how it is to be distributed if it isn’t required to be paid out. That statute has no provision for the government to seize that private asset.
The rule specifically requires that if premiums exceed the amount required to pay losses and expenses, The rule regarding surplus funds is that they’re to be distributed to the members first, and then “distribute the excess to such health care providers covered by the association as is just and equitable.” Nowhere is there any mention of state embezzlement. There is still a U.S. Constitution which prohibits the government from taking private property without due process of law, though, and it seems New Hampshire has, in their desperation to balance the budget, ignored that protection.
The Attorney General’s office has issued a memo claiming that, in their opinion, there is nothing to prohibit the state from seizing the fund by legislative process. That process has not occurred, though. The governor is simply deciding to take the money. Even if there were such legislation, that would be in opposition to the statute that set the fund up in the first place.
If this theft goes unanswered, there’s no telling where our governments may strike next. If they need it to balance the budget, is it acceptable to dip into your 401k or other bank account as well? This may seem extreme and unlikely, but so is the notion of a state taking privately held mutual funds when they need it.