RALEIGH – The real scandal is not what’s illegal but what’s legal.
I was thinking about that truism the other day when reading an interesting news story from The News & Observer about the rather-strange arrangement that State Treasurer Richard Moore’s office has with State Insurance Services of Raleigh. The N&O zeroed in on how a recent change in state personnel law has resulted in special treatment for State Insurance Services, an outfit headed in part by individuals who previously raised campaign cash for Moore.
As it happens, the special treatment does not appear to have been intentional. The General Assembly enacted the change in law in a well-intended but clumsy attempt to protect the financial privacy of state retirees. While the law withholds the addresses of retirees from other firms that might want to market products to them, State Insurance Services had a preexisting contractual relationship with the treasurer’s office that continues to allow the company access to the addresses, updated monthly.
Perhaps I’m reading the story wrong, but it doesn’t prove that Richard Moore or his campaign had engineered a lucrative favor to his political supporters. One of the principals of State Insurance Services is a supporter of Beverly Perdue. And Moore’s office didn’t originate the legislative change in the first place.
What I was struck by, though, was the fact that there was a preexisting contract for State Insurance to sell dental and vision-care insurance to state retirees. “They are an extension of our organization,” said one treasurer’s office staffer of State Insurance Services. “We contract with them to deliver services and we count on them to deliver services and therefore they are in a different category.”
That doesn’t make a lick of sense to me. This is not a case where the state has already decided to fund a program or offer a service, and then turns to private vendors to solicit competing bids. State Insurance Services seems to have been given merely the sole right to pitch state retirees to purchase a private insurance product with their own dollars. Why should only one company be allowed to market such a product? How could that be in the interest of state retirees?
Intrepid N&O reporter Dan Kane pointed to the example of the N.C. Retired Governmental Employees’ Association, which also offers dental insurance as a membership perk. There could well be other insurers that would be interested in marketing competing products, too. When Kane asked how State Insurance Services obtained its exclusive arrangement with the state, the explanation he got was, to put it charitably, murky.
I suppose the argument could be made that allowing multiple insurers access to the mailing list might flood the mailboxes of state retirees with unwanted solicitations. But at most, that’s an argument for restricting access to a set number of competing providers, not to a single company. And given how many other solicitations people get in the mail each day from credit-card companies, charities, and other institutions, I doubt whether there would be any discernible consumer burden from a more open market for supplemental insurance.
What the N&O identified here may not have been a political scandal but it was a scandalously cozy relationship between state government and a single, well-connected firm.
Hood is president of the John Locke Foundation.