WHAT OTHERS SAY: Time to let Missouri's quasi-state insurance company sink or swim

Thursday, March 1, 2012 | 9:59 a.m. CST

It's time for the state of Missouri to get out of the insurance business.

Since 1993, through the state-chartered public corporation Missouri Employers Mutual Insurance Co., the state kind of, sort of has been a player in the workers' compensation field.

The company, created by the Missouri General Assembly, was an attempt to improve the workers' compensation market for small businesses in the state. After the company paid back its $5 million in seed money, which it did in 1999, it was supposed to stand on its own, like a kid graduating from college who leaves the family nest.

But mom and dad never quite released their protective embrace of MEM. That's because governors crave power, and when they get to play with a multi-million-dollar business with little oversight, well, that's the sort of siren song that is too strong for any politician to ignore.

So here's what's been happening: Since its inception, a string of Missouri governors has appointed cronies to the board that oversees MEM. The insurance company gets the benefit of being a quasi-public body, receiving federal tax-exempt status, which helped it build up a $163 million surplus. The payback for such a sweet deal, of course, is supposed to be behaving somewhat like a public body.

But MEM doesn't do that, as a devastating audit issued Monday by state Auditor Tom Schweich revealed. The quasi-public body paid lavish bonuses, spent money on trips to the Mexican resort community of Cabo San Lucas and generally ignored public disclosure laws.

It's time to cut the cord.

MEM shouldn't reap the benefits of a public body with none of its checks and balances. Similarly, it's patently unfair for an insurance company to have built-in advantages over private-sector competitors that pay taxes.

The cause of this contradiction is one of the longest-standing and most corrosive traditions of American politics. It's called crony capitalism.

Lawmakers set up MEM and put one of their own, former state Sen. Dennis Smith, a Republican, in charge of the company. He served as CEO until 2009, when former Gov. Roger Wilson, a Democrat, took over. Mr. Wilson was forced out last year amid investigations by the FBI into two MEM board members, both of whom since have died.

Mr. Schweich's audit found questionable campaign contributions to the Missouri Democratic Party using company funds during the time Gov. Jay Nixon has been the titular head of the party. The audit doesn't tell us who made those decisions.

Nor does it tell us who received the lavish golden parachutes, or even which executives were making the more than $300,000-a-year salaries. That kind of compensation might be appropriate in the private insurance industry, but it's out of line for state government work.

Before the audit, new CEO (and longtime Nixon friend) Jim Owen of Chesterfield told lawmakers he had nothing to hide. Then the company proceeded to hide some of the most important details. If MEM were a publicly traded company competing on the free market, Missouria residents would know more about it than it does now.

This is what happens when politicians use their power to enrich, however legally, their buddies.

It's time for the Missouri Legislature to end this charade. Pass a law, similar to one sponsored by Sen. Jim Lembke, R-Lemay, that would make MEM a private company free of government involvement.

Mr. Nixon should champion such good government rather than avoiding questions about MEM. Republicans should demand a free-market solution rather than clinging to this secret gem, hoping for the day when one of their own again occupies the governor's mansion.

It is time for Missouri lawmakers to kick this kid out of the house.

Copyright St. Louis Post-Dispatch. Reprinted with permission.

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