July 12, 2010; Source: New York Post | It never hurts to have friends in high places, especially when government contracts are being awarded. The New York Post reports that the nonprofit subsidiary of a health insurance company that employs the wife of New York Governor David Paterson has been awarded a $297 million contract to subsidize insurance for individuals with pre-existing conditions who have no health coverage.
The awarding of the no-bid contract to GHI could yield up to $30 million in what the Post describes as “administrative costs” to Emblem Health, the parent company that employs New York State First Lady Michelle Paterson. A top Democratic lawmaker told the paper that the selection of a company where “the governor’s wife works without bidding or public notice raises serious disturbing questions. This is something that is troubling and something we plan to look at.” That same person also said the decision also raises questions about why GHI was chosen as program administrator when the state could have joined nearly two-dozen others that are letting the federal government take on this responsibility.
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When Gov. Paterson announced the contract earlier this month, he said among the factors favoring GHI was that the company, a subsidiary of Emblem Health “is the only nonprofit company authorized to operate statewide in New York,” adding that its “statewide network of participating providers will make it easier to facilitate access for care for New Yorkers all around the state.”
The Post notes that the state’s decision came nearly 90 days after U.S. Health and Human Services Secretary Kathleen Sebelius let governors know that funding for the special program had become available. Although other insurance companies said they wanted to bid on the project, a spokesman for the state insurance department said there wasn’t time to invite others to apply for the contract. He also insisted that GHI’s choice had nothing to do with the First Lady being employed by its parent, where she is paid $152,000 annually. Maybe not, but in today’s day and age, even appearances to the contrary are likely to raise eyebrows. And they did.— Bruce Trachtenberg