Legislature(1995 - 1996)
03/27/1996 03:11 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 407 - INSURING PERSONS WITH GENETIC DEFECTS Number 0066 REPRESENTATIVE JOHN DAVIES, sponsor of HB 407, said the bill was an attempt to anticipate problems down the road, rather than a response to an existing crisis. It was patterned after similar legislation adopted in California. He read from the sponsor statement: "Genetics, as you know, have the potential to bring a great deal of good to humankind, through disease prevention, early detection, and new disease treatments (for example, gene therapy). Researchers continue to narrow down genetic indicators of diseases and as of today have identified over 4,000 single-gene disorders. A person may have predictive screenings for many of these disorders, as of today. However, a person who has a genetic marker may not ever develop the disease, nor does it indicate the person's current health." Representative Davies added that in many cases, given the gene marker, the probabilities for developing a disorder were unknown. REPRESENTATIVE DAVIES continued: "Although insurance discrimination based on genetic information is not known to be widespread, it will be a tempting area for competitive insurance companies to identify high risks and cut costs. In essence, it has the potential of becoming the 21st century's version of a `pre- existing condition.' In order to address this policy question before any abuse is widespread, I have introduced HB 407. This bill would prohibit insurance companies that operate in the state of Alaska from discriminating on the basis of genetic information. Arizona, California and Florida have already adopted similar statutes." Number 0228 MICHAEL L. LESSMEIER, Attorney for State Farm Insurance Companies, stated, "We don't currently order genetic testing. We don't use it. We don't have any plans to use it. We're not aware of anyone that is using it in Alaska. It's another one of these bills that you are being asked to legislate for a problem that doesn't exist, and we don't have any evidence that it's going to exist. At this point, we don't know how this kind of testing could be used in the future. For example, we should be able to, we think, or the health care people should be able to, inquire as to a person's background, whether they have a history of cancer, whether they have a history of high blood pressure. Those are legitimate things to rate for. And it's hard to imagine how this information might be used in the future or what it would cover." MR. LESSMEIER continued, "We don't even know if it would prevent underwriters from considering those legitimate risk factors. And what you do, if you're not able to consider risk factors like that, you essentially end up treating everyone the same. In other words, some people that don't have those risk factors would pay more than they would otherwise pay. And I think the people that represent the health insurers certainly know more about this issue and the potential problems than do I. All I want to say to you is that we want to be able to, even though we have no plan to use this technology now, we want to be able to see what will develop some time down the road. And if there is not a problem now and there isn't a foreseeable problem, the question is why should we legislate in this area right now. We don't think there's a need to." Number 0431 REPRESENTATIVE KIM ELTON read from a one-page article from the Stanford Observer, which quoted Nobel economist Kenneth Arrow as saying, "There are a few examples now, and very possibly, as the human genome project progresses, we will have people who are uninsurable at birth because they already have a high probability of very costly diseases." Representative Elton noted that Arrow stated a view opposite to Mr. Lessmeier's. MR. LESSMEIER restated earlier comments and said, "You could always legislate based on the possibility of something happening. We think you ought to legislate based on what we know is happening. That's our point." Number 0517 CHAIRMAN KOTT suggested if someone were aware of a defect that would inevitably cause multiple claims or even, further into the future, death, it would be in that person's interest to approach an insurance company and ask for insurance. Subsequently, based on the risk, the company could pass along the premiums to everyone else that it insured. MR. LESSMEIER responded, "I think that's true. And the best example of that is, for example, HIV. If somebody's HIV-positive, should they be able to spread that risk across society in general? And that is a debate, certainly. I think right now we're allowed to ask questions about smoking history, about cancer history, about personal health history in the family. And that is what allows one to underwrite. And so the question really is, are you going to take all of the issues away, one by one by one? And so, there really is no underwriting. What we end up having is ... you insure everybody the same. And that really is the question." Number 0636 CHAIRMAN KOTT asked what State Farm's current practice was regarding insuring individuals with cancer or who had tested positive for HIV. MR. LESSMEIER indicated State Farm had permission in Alaska to conduct an HIV test that was taken into consideration. However, he did not know what the result would be. Number 0686 CHAIRMAN KOTT asked whether the insurance company could reject an applicant who tested positive for HIV. MR. LESSMEIER replied yes. Number 0705 REPRESENTATIVE GENE KUBINA asked who would pick up the tab for people unable to get insurance. MR. LESSMEIER said, "In reality right now, what happens is we have a catastrophic health care program that was passed by the legislature a number of years ago. And I think you folks are debating the problems with that in terms of funding with that. That is a problem." REPRESENTATIVE KUBINA responded, "In other words, we pay for it, as a state." MR. LESSMEIER replied, "I think ultimately society, in general, pays one way or the other. I don't think there's much question about that. For example, if somebody goes out to the hospital and doesn't have the ability to pay at the hospital, I think we all pay higher medical cost care because of that. It just is a question, largely, of how you want to shift that risk." Number 0780 CHAIRMAN KOTT suggested if individuals who tested HIV positive, for example, had to be accepted as applicants, either everyone's insurance rates would increase or the insurance company would ultimately go out of business, leaving a number of uninsured. MR. LESSMEIER responded, "I think you're right." Number 0853 REPRESENTATIVE ELTON said if the use of genetic markers was allowed to test a person's disposition to disease, there might be significant cost shifting from the private insurance industry to the state or federal government as high-risk people were taken out of the private pool. He believed that was a significant decision. Currently, insurance was based on large pools; the larger the pool, the lower the cost was. He suggested allowing that pool to shrink through use of genetic markers would allow the "cream" to go to private industry, with the cost shifting to the government. Number 0974 MR. LESSMEIER said that already occurred, in a sense, through lifestyle decisions and luck of the draw. The question was whether a company should be able to rate for those particular qualities that a person had. Mr. Lessmeier reiterated that it did not appear to be a problem in Alaska. REPRESENTATIVE ELTON responded, "The other way of doing that is we can say no to use of genetic markers. And then, if it becomes a problem, we can come back and change [it]." MR. LESSMEIER said it was solving something that was not a problem. Number 1072 REPRESENTATIVE KUBINA asked about Mr. Lessmeier's assertion that testing was not used in Alaska. MR. LESSMEIER replied, "I don't think we use it anywhere." Number 1115 GORDON EVANS, Lobbyist, Health Insurance Association of America (HIAA), said HIAA was a trade association of commercial health insurance companies providing health insurance for approximately 55 million Americans. He expressed that there was no evidence health insurers now use genetic tests in underwriting or that they have plans to do so. Mr. Evans said there is simply no reason to use genetic tests. They are not now widely available, their cost is prohibitive, and information generated from them is limited at best. MR. EVANS suggested much of the information from genetic tests could be gathered by an insurance company more directly and less expensively by, for example, asking about personal and family medical history. "An individual's overall insurability takes into account all relevant and known health information," he said. "Insurers need to know facts about an applicant for coverage that will enable the insurer to estimate the applicant's chances of suffering a serious illness. If an individual knows something about himself that an insurer cannot know ... such as the possibility that he has or may have an asymptomatic genetic characteristic - and that ... can include something like diabetes, heart conditions, and so forth -the individual, if he doesn't give that information to you, is in a position to strike an unfair bargain with the insurer. In other words, the applicant would be able to purchase coverage at standard rates when he in fact represents a greater-than-average risk." MR. EVANS said this would confer a preferred status on those with known or possible genetic diseases and would discriminate against most Alaska individual insurance consumers. He emphasized that the discussion related to individual policies, because in a group policy, each individual is not rated. Individuals who currently pay an extra premium because of some health risk that is not genetic in nature would be unfairly treated, since a similar premium would not be required of those with an asymptomatic genetic characteristic. Insurers are already subject to state laws that mandate fairness in classifying health insurance applicants, Mr. Evans said, adding, "There is simply no evidence that insurers are doing otherwise. House Bill 407 is a good example of unnecessary legislation." Number 1309 MR. EVANS referred to the high-risk pool enacted several years earlier by the legislature and said to his knowledge there were only two people in that statewide pool right now. The insurance companies paid for that, not the state, he said, with the cost spread to all the companies. Aetna had raised a question because they paid the biggest portion of those costs, since they had the largest share of the health insurance business in Alaska. Mr. Evans noted that Blue Cross and Aetna had over 70 percent of Alaska's health insurance business currently. "And my companies take up much of the other 30 percent, then," he added. Number 1378 REPRESENTATIVE NORMAN ROKEBERG suggested there were closer to 190 members of the Comprehensive Health Insurance Association (CHIA) program. MR. EVANS apologized and said Representative Rokeberg was correct. He said the two people were in the small insurance group program enacted three years ago. There were 190 in CHIA, with costs spread among the companies. Number 1438 REPRESENTATIVE KUBINA asked who paid when uninsured people went to hospitals. He asked if Medicaid or other government programs covered that. MR. EVANS replied, "If they're eligible for Medicaid, yes." However, a hospital would absorb the cost for those who were uninsured, he said, adding, "Of course, then, that spreads around to everybody else who is insured, who end up paying higher premiums." REPRESENTATIVE ROKEBERG said about 30 percent of people were uninsured nationwide. He asked what that percentage was in Alaska. MR. EVANS said he did not know. "Several years ago, when the Senate was considering some of the programs that Senator Duncan had put forward in the joint task force, I think at that time they thought that only about 20-some percent of the people in Alaska were uninsured," he said. He said it was difficult to determine that figure. Number 1488 REPRESENTATIVE PORTER referred to the definition for "asymptomatic genetic characteristic" on page 2, lines 6-10, and suggested that having a condition known to cause disease or disorder was a reasonable basis for assessment. MR. EVANS replied, "Exactly." He indicated that was why insurance companies said if a person had a high-risk factor, the company must be able to know and consider that, among all the factors they consider, when they were going to underwrite somebody. Mr. Evans told Representative Davies, "I think your statement that California has passed this legislation is partially correct. It was vetoed by Governor Pete Wilson." He noted that the state of Wisconsin did have a version of it. Number 1564 CHAIRMAN KOTT asked how broadly genetic testing was used. MR. EVANS responded, "My people say they don't know of it going on. It may be. But it's hard to say. Medical research is improving day after day." He informed the committee he had provided the Stanford Observer article. "There are people that are doing it in medical research," he said. "But the insurance companies are not using it right now. Doctors are not calling for it on a mass level right now." He suggested the cost could range up to $1,000 per test or more. "The insurance companies don't want to get involved in that because they'd be expecting to have to pay for it," he added. CHAIRMAN KOTT asked who he would contact or what the process would be if he, for example, wanted to be genetically tested. MR. EVANS said he could not provide an exact answer. He suggested a person's doctor could put him or her in touch with a specialist. Number 1622 REPRESENTATIVE PORTER referred to discussions of "DNA bills" over the past couple of years and expressed his understanding that testing for Alaskans was done out of state. He indicated the cost range was $300 to $1,000, the latter for full-spectrum tests. REPRESENTATIVE KUBINA pointed out that a person who did not know about a genetic defect could get insurance. "But if you know about it and then you don't inform, that is where the problem comes," he said. Number 1674 REPRESENTATIVE ELTON wondered if a person could get a price break if genetic testing revealed no predisposition to a disease and that information was provided to the insurance company. MR. EVANS said, "You'd probably be the average person." CHAIRMAN KOTT concurred. He asked about Wisconsin's similar measure. MR. EVANS replied it had been defeated twice in Wisconsin before becoming law in 1992. He indicated Wisconsin, like Minnesota, had "adopted every known mandate there is" relating to health care. Number 1735 CHAIRMAN KOTT asked if research suggested any state that had passed such a measure had seen an increase in the number of applicants who may have been tested. MR. EVANS replied there were no studies he knew of. The laws in the three relevant states, passed in 1992 or 1993, were too new to have developed statistics, he said. Number 1763 REPRESENTATIVE JERRY SANDERS asked if any insurance company had ceased doing business in a state that had enacted such a law. MR. EVANS offered to find out. CHAIRMAN KOTT asked if Mr. George, who had left the meeting, planned to return to testify. He then closed public testimony. REPRESENTATIVE DAVIES asked Shannon McCarthy to relate her experience with genetic testing. Number 1821 SHANNON McCARTHY, Legislative Assistant to Representative John Davies, said she got food poisoning from a local restaurant three years before. A particularly bad case, it turned into blood poisoning. Seven days after recovering, she developed an excruciating pain in her lower back that prevented her from walking. Subsequently, she took a gene test and discovered she had a gene called HLA B-27 that in rare instances could cause reactive arthritis. MS. McCARTHY expressed that it was useful to know she had arthritis and how to recover, and the test had only cost $100. "My interest in this bill is I want people to be able to pursue gene tests if they think that they might have a genetic characteristic, so that they could take preventive measures," she said. With over 4,000 single-gene disorders identified already, she believed there was potential for a lot of good. She would hate to see people fear taking those tests, she concluded. CHAIRMAN KOTT asked if that test was done in Alaska. MS. McCARTHY replied it was done at the Juneau Urgent Care and Family Clinic. The test was sent out of state and took about one week to get back. CHAIRMAN KOTT asked if she was insured at the time. MS. McCARTHY replied she was not. CHAIRMAN KOTT asked if it affected her insurability. MS. McCARTHY said luckily, the arthritis had gone away. "However, if I got food poisoning again that became blood poisoning again, I could very well have a bout of arthritis again," she stated. Number 1954 REPRESENTATIVE KUBINA asked if she felt required, in filling out an insurance form, to list that information. MS. McCARTHY replied she had never been asked to list what genes she had on a form. REPRESENTATIVE KUBINA suggested the question might ask if she had any prior known symptoms or pre-existing conditions. He asked if this would be something she would have to reveal. MS. McCARTHY replied, "I would have to say yes, because I actually developed the condition. If I had just been tested for this gene, I don't know." She indicated it was a rare instance, as the majority of people with the gene would never develop the disease, which was the case with most genes. REPRESENTATIVE KUBINA said obviously this was the dilemma. If the technology was there, then what was the responsibility of the person once they knew, he asked. He stated that he had not understood the reason for the bill until Ms. McCarthy spoke. Number 2035 REPRESENTATIVE DAVIES responded to comments at the hearing. He said the bill raised a question about the nature of insurance, which was currently handled in a bifurcated way. So-called normal people came under the private system. The ones that were catastrophic, such as HIV or other high-risk situations, were handled through high-risk pools that were largely subsidized. And then people who were uninsured were also subsidized through various mechanisms of feeding back to normal insurance policies, Medicare programs and the state legislature's general fund budget, he said. REPRESENTATIVE DAVIES noted it was a hybrid system and said the question was whether to continue down that road. "As science advances and our information about diseases becomes more and more complete, and our ability to predict people's health futures becomes better and better, we're going to get into a dilemma," he said, suggesting that if the information was sufficient, a situation could develop where insurance did not work at all and individual people would be back to paying for exactly what their health care costs were. "They're going to be so varied ... and extremely varied that we'll go back to some kind of societally modulated system, which will be some new form of insurance," Representative Davies said. "That's ... the path that we're heading down and which I'm trying to forestall, for at least some period of time, with this bill." Number 2131 REPRESENTATIVE DAVIES believed that for the insurance companies to say nothing should be done until there was a problem was analogous to arguments about placing a traffic light at an intersection. He referred to information in the committee packet discussing near- misses and cases where people became uninsurable. In addition to states that had enacted laws, 12 others were considering similar legislation. He asked committee members to read the examples provided, which he attributed to abuse of the circumstance in question. Number 2215 REPRESENTATIVE DAVIES pointed out that development of a disease based on genetic factors was the exception, not the rule. Thus, it was not in the same category as a pre-existing condition or family history, he said. It was also different from smoking, for example, which was voluntary and for which he believed insurance companies should charge higher rates. He noted that many genetic tests cost around $100, which was one of the reasons he had asked Ms. McCarthy to testify. He thought there should be a moratorium on insurance companies using this type of discrimination until the companies could demonstrate there was a problem. "As a general rule, we should be erring on the side of protecting the citizens from this kind of discrimination," he concluded. Number 2332 REPRESENTATIVE PORTER suggested the traffic light analogy supported his argument against the bill, as well. He said traffic lights often were put up as a result of a single incident. He agreed the bill asked a fundamental question about insurance. However, he viewed it as cutting out what could potentially be a gigantic element for appropriately determining risk, which was the way insurance worked. CHAIRMAN KOTT said he somewhat agreed. "It is a direct policy change," he said. "Insurance is a mechanism whereby people may act to minimize losses which occur [from] basically unexpected events. It's a pretty simple mechanism if you look at it from a broad perspective. A large number of people pay relatively small amounts, which, when aggregated, are sufficient enough to cover relatively large losses suffered by some of the insured. Plus, there is some profit built into the system for the carrier. And in order for this system to work, it is necessary, I believe, for the carrier to accurately assess their risk and to assign higher premiums based on the risk." He noted this bill took a different approach. Chairman Kott invited John George to testify. Number 2453 JOHN L. GEORGE, Lobbyist, American Council of Life Insurance (ACLI) and National Association of Independent Insurers (NAII), apologized for being late. He said it was possible to come up with one rate for everybody. As the ability for an insurance company to select diminished, the rates became more homogenous. TAPE 96-30, SIDE B Number 0001 MR. GEORGE said DNA testing was new. He suggested it was possible that almost any propensity could be related to genetics. Therefore, if questions about family history were in fact genetics- related, those questions could no longer be asked to determine rates if the bill were enacted. CHAIRMAN KOTT asked how various companies would use information on an individual's lineage and family medical history. He asked if a person revealing a particular medical history would be rejected or put into a different pool or assigned a higher premium. MR. GEORGE replied that he did not know. He offered to find out. Number 0118 REPRESENTATIVE DAVIES asked who paid for uninsured people who, for example, showed up at hospital emergency rooms. MR. GEORGE responded, "Directly, if they're uninsured, they're responsible for their own debts. And I assume from your question that we're talking about people who are unable to pay their own bills. Then, the hospital, in theory, would eat that. But we all know that they aren't going to lose the money. Therefore, they raise everyone else's rates and the insurance companies are paying for worker's comp injuries. Blue Cross, Aetna [and] others are paying those." Number 0199 REPRESENTATIVE DAVIES said he thought that was an example of the situation that would be developing in Alaska. "We're all paying more because people aren't taking care of their health care costs in an earlier stage of disease or in a more appropriate way," he said, "so that we get into a catastrophic situation. People show up at the emergency room. And ... we pay for it one way or the other. And what I'm suggesting is that we're paying for it in a more expensive way now than we would if we had dealt with it up- front. And I think that the same kind of argument applies to the case ... of genetic testing. To the extent that we will discourage people from testing and finding out at an early stage what's going on with them, ... we will be driving costs up." REPRESENTATIVE DAVIES reiterated that the vast majority of asymptomatic genetic characteristic situations did not become symptomatic. He believed it was still in the realm of the way insurance was currently handled. The cases involved were relatively rare and because of lack of information and understanding were viewed as random events, which they probably were not. He believed those situations should remain in the insurance pool for some period of time, so that people were protected in the meantime, as this information became more available. It would not do damage to the insurance companies, he said, nor would it discourage people from taking the tests. Number 0260 MR. GEORGE said life insurance, in particular, was transportable from state to state but that the rates might differ. He suggested people could travel to another state to buy policies, which could work to the detriment of Alaskans who did not do so. He expressed that such basic policy issue needed to be looked at on a national basis. He emphasized the early development of DNA testing and said the answer might be more obvious later on. CHAIRMAN KOTT asked whether the Aetna group offered individuals an opportunity to use their policy for genetic testing. MR. GEORGE replied he had no idea. "Aetna is a member of the American Council of Life Insurance, whom I am speaking for, for I don't speak for them specifically," he said, noting that Reed Stoops was Aetna's lobbyist. Number 0370 REPRESENTATIVE ELTON expressed that the problem was beyond the realm of theory. He referred to Ms. McCarthy's pre-existing condition, which she would not have known about if not for genetic testing. Representative Elton said a responsible business would be looking at ways to increase profits. If genetic testing could do that by taking high-risk people out of the pool, he guessed insurance companies might use it. He thought the bill would create no problem but might prevent one. REPRESENTATIVE PORTER believed there was no great concern that someone would not want a genetic test, except for the bad news it might impart. Number 0597 REPRESENTATIVE ROKEBERG complimented the sponsor but expressed concern about the unanimous lack of support on the part of the insurance industry. "And what concerns me about the health delivery systems in this state is the lack of representation in this state of health insurance companies," he said. "Although there are a number of companies that are registered with the state and do write policies up here, the power and concentration is with two primary firms. And I am very concerned about beginning to provide cost-effective policies, particularly for individuals. We heard testimony here that when this is an inability to rate, and if there's rating problems, it really goes against individual policy holders, not group policy holders." Number 0673 REPRESENTATIVE ROKEBERG referred to CHIA, which was under substantial financial pressure, and said, "That particular high- cost organization, which is fully funded by the insurance companies that move into the state, is going to be enough of a barrier and an obstacle for the invitation of health insurance underwriters to come into the state of Alaska. So, I'm concerned that by putting Alaska on the cutting edge of this type of thing, that we're going to be sending the wrong message to the people. And that would have a negative impact on the availability of health care insurance for the people of the state right now." He suggested the idea needed to age and mature like a good bottle of wine. Number 0756 CHAIRMAN KOTT expressed the desire to hold the bill to hear testimony from the Division of Insurance on potential ramifications and responses by Mr. George on questions raised. "I do think there potentially is a problem out there brewing," he said, "and it's certainly, I think, a unique opportunity to bring this issue to the table and open it up for debate. I applaud the sponsor for doing that."
| Document Name | Date/Time | Subjects |
|---|