Lujan Grisham criticized for past ties to health care firm

2018-05-24 | Albuquerque Journal

May 24--SANTA FE -- A health care consulting company that Michelle Lujan Grisham co-founded in 2008 has repeatedly landed contracts to help run a state high-risk insurance pool, which critics have described as redundant, given provisions of the 2010 federal Affordable Care Act.

Although Lujan Grisham divested herself from Delta Consulting last year, the company is still owned by her campaign treasurer -- state Rep. Deborah Armstrong, D-Albuquerque, and has emerged as a thorny issue in the Democratic primary race for governor.

During a televised debate Sunday, one of the three Democrats in the race, former media executive Jeff Apodaca, accused Lujan Grisham and Armstrong of enriching themselves off the contract.

Apodaca said Lujan Grisham and Armstrong are taking "federal and state funds, and running the high-risk pool that doesn't really need to exist anymore.

"And they're paying themselves thousands and thousands of dollars," he said. "That's money that could go to New Mexico families."

The other Democrat in the three-way primary race, state Sen. Joseph Cervantes of Las Cruces, also chimed in, telling Lujan Grisham in the debate: "You've been paid a lot of money from a state contract until you decided to run for governor."

State Insurance Superintendent John Franchini, chairman of the medical insurance pool's board, said Thursday that Delta has won competitive bids in recent years to handle much of the administrative work associated with the high-risk insurance pool.

The current yearly contract is for roughly $600,000 and lasts through 2018, he said. It's paid by a mix of insurance company fees and patient premiums, not state dollars, Franchini added.

"What I've tried to do with the situation is to make it fair, transparent and open," he told the Journal.

He also said Lujan Grisham and Armstrong have been aboveboard in their handling of the contract, saying, "They haven't stolen anything, and they've done a good job."

During the debate, Lujan Grisham responded to the attacks by describing the claims as "ludicrous," and said there was a misunderstanding about both Delta Consulting and the high-risk insurance pool's function.

"Delta is a patient advocacy company," she said. "It's the same work I've dedicated my entire life to."

The high-risk insurance pool assists New Mexico residents who do not have insurance or have been quoted at higher rates than the pool's rate. Its enrollment has dropped significantly since enactment of the Affordable Care Act.

Conditions met

New Mexico's Governmental Conduct Act allows elected officials and legislators to contract with state government, but only if the contract is issued after a competitive bidding process and if the elected officials publicly disclose their interest.

Those conditions appear to have been met, at least in recent years, by both Lujan Grisham and Armstrong.

Lujan Grisham's campaign manager Dominic Gabello said Lujan Grisham received no salary from Delta after being elected to Congress, though she did cite an annual income of between $15,000 and $50,000 from Delta Consulting on congressional financial disclosure forms in past years.

That income represents distributions from the company that were largely used to pay the firm's tax bills, Gabello said.

In addition, Lujan Grisham divested her interest with Delta Consulting in June 2017 -- six months after announcing her bid for governor -- and is no longer financially involved with the company, Armstrong told the Journal.

She also said Lujan Grisham asked the U.S. House Ethics Committee to review her ownership interest in Delta Consulting in 2011, her first year in Congress. The panel found her to be in compliance with House ethics rules, Armstrong said.

A former state Cabinet secretary under three governors, Lujan Grisham announced in late 2016 she would forgo a re-election bid to her Albuquerque-area congressional seat and instead run for governor.

Since then, she has emerged as the front-runner in the contest for the Democratic Party's nomination, having used her broad network of connections to outraise her two rivals, and secure endorsements from labor unions and more than two dozen Democratic lawmakers.

Meanwhile, Delta Consulting has also made hefty campaign contributions to both Lujan Grisham and Armstrong. Lujan Grisham reported receiving $11,000 in contributions -- the maximum amount allowable for the 2018 election cycle -- for her gubernatorial bid from Delta in March 2017.

There are no laws barring candidates' businesses from contributing to their campaigns and Cervantes has also reported taking sizable donations from several family-owned agriculture businesses that he plays a role in operating.

Shrinking pool

Lujan Grisham said during the Sunday debate that New Mexico's high-risk insurance pool specifically pays for the hospitalization and treatment of individuals who have been denied insurance coverage, including children with cancer, and adults dealing with liver and kidney diseases.

But overall program enrollment has declined since then-President Barack Obama signed into law the Affordable Care Act, which barred health insurance companies from denying coverage to individuals with pre-existing conditions.

There are currently about 2,700 individuals enrolled in the pool, down from roughly 10,000 at the time Obamacare was enacted, Franchini said. Many of those enrolled are immigrants who are in the country illegally and cannot qualify for federally subsidized health insurance.

But Franchini said he's wary of doing away with the pool, given the recent debate in Congress about repealing or overhauling the landmark federal health care law.

"I'm afraid to get rid of it, because I can't tell what the national health care environment might be," Franchini said Thursday.

Others disagree.

Rep. Paul Bandy, R-Aztec, introduced 2017 legislation that would have effectively done away with the high-risk insurance pool, but that bill was tabled in a House committee that's chaired by Armstrong. She did not vote on the bill and said Thursday that she was intentionally absent for the debate on it.

Despite the bill's defeat, Bandy said most states that had created similar high-risk insurance pools scrapped them after the Affordable Care Act took effect.

"There's no point to having it if you already have to cover pre-existing conditions," he told the Journal.

He also said the involvement of Lujan Grisham and Armstrong in the company with a contract to help run the program raises red flags, at least to him.

"It's kind of an inside job," Bandy said.