Legislature(1995 - 1996)
04/26/1996 08:20 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
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HOUSE FINANCE COMMITTEE
April 26, 1996
8:20 A.M.
TAPE HFC 96-141, Side 1, #000 - end.
TAPE HFC 96-141, Side 2, #000 - end.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 8:20 a.m.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Navarre
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Kohring
ALSO PRESENT
Senator Dave Donley; Marianne Burke, Division of Insurance;
Gordon Evans, Health Insurance Association of America; Don
Koch, Division of Insurance, Department of Commerce and
Economic Development; Michael Lessmeier, State Farm
Insurance.
SUMMARY
SB 175 An Act relating to correctional institutions and
their administration; providing the Department of
Corrections with the authority to require
prisoners to assist in paying for medical
treatment; relating to the authority of a law
enforcement agency to charge a prisoner for
medical costs for a preexisting condition; and
relating to service of criminal sentences.
SB 175 was rescheduled to another time.
SB 197 An Act prohibiting increases in health insurance
premiums if the insured is a victim of domestic
violence.
HCS CSSB 197 (FIN) was reported out of Committee
with a "do pass" recommendation and with a zero
fiscal note by the Department of Public Safety;
and with a zero fiscal note by the Department of
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Commerce and Economic Development, dated 2/23/96.
SENATE BILL NO. 197
"An Act prohibiting increases in health insurance
premiums if the insured is a victim of domestic
violence."
MICHAEL LEESMEIER, ATTORNEY, STATE FARM INSURANCE INC. urged
the Committee to decide the issue on the basis of reason and
logic. He observed that subsections (a) and (b) allow an
insurer to rate on the basis of status or condition. He
emphasized that domestic violence should be a non-factor.
He maintained that there is no need to include property and
casualty. He asserted that discrimination based on one's
status as a victim of domestic violence in the area of
property and casualty has not occurred. He refuted examples
from the Women's Law Project in Philadelphia. He stressed
that insurance was denied primarily due to multiple claims.
He observed that life, health and disability are lines of
insurance that cover the person. He asserted that there are
no problems in this area in Alaska. He maintained that
there will be litigation as a result of the legislation.
Mr. Leesmeier discussed confidentiality. He stated that the
provision contained in the original version was onerous. He
reiterated that there is no problem with confidentiality in
Alaska. He maintained that an insurer is the least likely
to know about someone's status as a victim of domestic
violence. He maintained that State Farm respects the
confidentiality of records the company receives. He
acknowledged the sensitive nature or medical records. He
urged the Committee not to create a new problem while trying
to solve a perceived problem.
Mr. Leesmeier requested that the provision regarding
notification of denial not be changed. He maintained that
there is no existing problem that would require change. He
stressed that a provision requiring explanation of denial
would be costly. He stressed that a written request should
be required for explanations of denial.
Mr. Leesmeier maintained that State Farm Insurance supports
the concept of the legislation as long as the legislation is
specific and does not create more problems than it solves.
He spoke in support of CSHB 197 (L&C) with the deletion of
property and casualty.
Representative Brown referred to "Insurance Discrimination
Against Victims of Domestic Violence" by the Women's Law
Project and the Pennsylvania Coalition Against Domestic
Violence (copy on file). She observed that the report
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states that: "Insurance companies that become members of
these databases are required to report client risk factors
and are entitled to request risk-related information on an
applicant or insured.
Mr. Leesmeier maintained that State Farm Insurance Co. does
not ask or report information relating to domestic violence.
He did not know if State Farm belong to any of these data
base companies.
Representative Brown explained that the amendment would
prevent insurance companies from passing on information
received through medical records regarding domestic
violence. Mr. Leesmeier asserted that the amendment goes
beyond the purpose stated by Representative Brown. He
maintained that the amendment would require a search for
something that "reflects" the fact that someone was a victim
of domestic violence. He emphasized that the amendment
would created an obligation that does not already exist. He
acknowledged that State Farm does receive medical records on
some cases. He maintained that the information would be
relevant in an injury claim. He reiterated that
confidentiality is not a problem.
Representative Martin expressed concern regarding
confidentiality.
GORDON EVANS, HEALTH INSURANCE ASSOCIATION OF AMERICA spoke
in support of CSSB 197 (L&C). He expressed support for the
deletion of property and casualty.
Representative Brown asked if members of the Health
Insurance Association of America are members of data base
companies. Mr. Evans could not answer. He estimated that
most insurance companies participate in medical data bases.
He did not think that domestic abuse was reported. He
pointed out that domestic violence is not an underwriting
criteria. He emphasized that the condition at the time of
application for a policy is the relevant factor.
Representative Brown asked for examples of reporting forms
used by insurance companies that are members of data base
companies.
MARIAN BURKE, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF
HEALTH AND SOCIAL SERVICES spoke in support of the
legislation. She stressed the importance of preventing
unfair discrimination. She requested that "applicant or
insured" be replaced by "person". She explained that the
proposed language would close potential loop holes. She
expressed concern that confidentiality be maintained. She
stated that most insurance companies participate in data
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base activities. She noted that the National Association of
Insurance Commissioners (NAIC) has been working on the
issue. She stressed that victims of domestic abuse should
not be created into a special group.
In response to a question by Representative Parnell, Ms.
Burke explained that the applicant or insured could pertain
to the employer as opposed to the victim.
Representative Parnell referred to page 1, subsection (b).
Ms. Burke explained that (b) precludes an insurance company
from looking at the cost. She stated that (b) strengthens
the bill.
Representative Brown asked if Ms. Burke has reviewed
Amendment 9-LS1218/W.4. Ms. Burke stated that the amendment
was based on a draft model act by the NAIC. She stressed
that the model act that the amendment was based on was not
adopted by the NAIC.
Representative Martin referred to the use of "person". He
expressed concern that unborn children are not considered a
"person".
Ms. Burke stressed that "person" is broader than
"applicant".
Representative Mulder provided members with Amendment 1
(copy on file). He moved to adopt Amendment 1. Amendment 1
would insert "offering life, disability or health insurance
in Alaska." Senator Donley spoke in opposition to Amendment
1. He noted that the amendment would remove property and
casualty from protection against discrimination. He
stressed that there is no good policy reason to allow
discrimination of domestic violence victims in property and
casualty issues.
Representative Parnell noted that the legislation makes a
policy statement about discrimination of victims of domestic
violence by insurance companies. He noted that the
amendment would imply that it is okay to discriminate in
areas of property and casualty. He suggested the amendment
be applicable across the board.
Representative Mulder argued that there is no
discrimination.
Representative Parnell reiterated that the legislation is
creating a new law. The amendment would leave in place the
other areas of interest.
Representative Martin expressed concern that insurance
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companies would increase their prices.
A roll call vote was taken on the MOTION to adopt Amendment
1.
IN FAVOR: Kelly, Kohring, Martin, Mulder, Therriault,
Foster, OPPOSED: Brown, Grussendorf, Navarre, Parnell,
Hanley
The MOTION PASSED (6-5).
Representative Navarre MOVED to adopt Amendment 2, 9-
LS1218\W.2, amended to add "or the Division of Insurance"
after "jurisdiction" on line 6 (copy on file).
(Tape Change, HFC 96-141, Side 2)
Senator Donley suggested that "reflect" be changed to
"identify" and "required" be changed to "authorized".
Representative Navarre MOVED to AMEND Amendment 2, delete
"reflect" insert "identify;" delete "required" and insert
"authorized;" and delete "was" and insert "as." Senator
Donley noted that the language was discussed by the House
Labor and Commerce Committee. There being NO OBJECTION, the
amendment to the amendment was adopted.
Mr. Leesmeier questioned what is meant by "identify". He
stressed that a search would still have to be completed.
Representative Parnell asked if insurance companies mark or
code files related to medical conditions or risk factors.
Mr. Leesmeier did not know of any files that are marked or
coded. He suggested that insurers be instructed to not ask
for information regarding medical conditions. He
acknowledged that companies would receive medical records in
some instances.
Representative Parnell asked if right to privacy would
apply. Mr. Leesmeier replied that there is a common law
privilege for confidentiality of medical records. He stated
that the privilege is not waived when medical records are
submitted for defense.
Representative Brown noted that if an applicant has a
condition significant to health or longevity then authorized
personnel at member companies are required to send a brief
code report to the Medical Information Bureau (MIB).
Medical conditions are reported through codes. She noted
that the amendment will prevent a code that identifies
victims of domestic violence. She stated that insurance
companies that are members of MIB are required to report.
She stressed that problems can be created when people are
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identified in data base systems.
Mr. Leesmeier stated that the issue of medical data base
companies is new. He maintained that the motivation for
confidentiality provisions were that insurers would give the
information to the abuser. He did not think that insurance
companies asked about domestic violence. Representative
Brown pointed out that they receive medical information
without asking. She expressed concern that information
regarding a person's status as a victim of domestic violence
could be reported. Mr. Leesmeier responded that subsections
(a) and (b) would prevent the information from being
reported. Representative Brown pointed out that subsections
(a) and (b) are weakly written. She stressed that it might
not be the only factor.
Representative Martin suggested that medical providers be
required to keep records confidential.
Representative Brown emphasized that medical providers are
already instructed to keep medical records confidential.
She observed that if a victim of domestic violence wants
insurance they must sign a release to authorize records to
insurance companies.
Representative Grussendorf spoke in support of Amendment 2.
He noted that insurance investigators may discover the
incidence of domestic violence during investigations.
Representative Parnell observed that a class is being
signaled out. Representative Brown stressed that insurance
discrimination should not be allowed on any of the factors
identified. She pointed out that there are factors unique
to domestic violence that warrant protection against
discrimination. She emphasized that if a person knows that
they are not going to be able to get insurance they would be
less likely to leave an abusive relationship or situation.
She stressed that although there may be other factors that
might need corrective legislation there is no reason that
discrimination of victims domestic violence discrimination
should not be addressed in the legislation.
Representative Grussendorf noted that social issues change
over time. He stressed that the issue of discrimination
against domestic violence should be addressed.
Representative Kelly responded that trying to cure every
form of discrimination is a futile attempt.
A roll call vote was taken on the MOTION to adopt Amendment
2.
IN FAVOR: Brown, Grussendorf, Navarre, Therriault
OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Foster
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Co-Chair Hanley was absent from the vote.
The MOTION FAILED (4-6).
Representative Navarre MOVED to adopt Amendment 3, 9-
LS1218\W.2, dated 4/10/96. Representative Mulder OBJECTED.
Representative Navarre explained that the amendment would
require insurance companies to inform applicants in a
written explanation the reasons for refusal or cancellation.
Representative Martin expressed concern with Amendment 3.
He stressed that once an individual has been informed of the
reason for refusal or cancellation other insurance companies
can require them to provide them with this information.
Mr. Leesmeier stated that there is no existing problem in
regards to explanations of refusal or cancellation. He
maintained that the requirement to notify every policy
holder or applicant is over kill. He asserted that it is
more fair and efficient to require the information be given
upon request.
Representative Kelly questioned if this is a service that
would be encouraged by free market results.
Mr. Leesmeier stated that most people who are declined know
the reason for the refusal or cancellation. He maintained
that the provision is unnecessary and imposes an unnecessary
cost on the company. Mr. Leesmeier observed that they are
required to give written notification of cancellations. He
pointed out that the amendment would also require
notification of refusal.
DON KOCH, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE AND
ECONOMIC DEVELOPMENT clarified that insurance companies are
required to give notice and a reason for cancellation.
Insurance companies are not required to give a reason for
refusal of insurance. The reason has to accompany the
notice for non-renewals or cancellations.
Representative Navarre WITHDREW Amendment 3.
Representative Mulder MOVED to adopt Amendment 4 on behalf
of Senator Donley (copy on file). Amendment 4, 9-
LS1218\@.5, 4/25/96, would insert "person" and delete
"applicant or insured." Senator Donley explained that the
amendment was requested by the Division. He noted that the
person who is actually receiving the benefit would be
protected. Mr. Leesmeier suggested that the "person covered
by the insurance" be inserted. Mr. Koch noted that most
health insurance are written through group plans. He
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pointed out that a individual's child could be covered but
would not be the covered person.
Representative Martin noted that an unborn child would not
be covered. He OBJECTED to Amendment 4.
Mr. Koch reiterated that applicant or insured may be too
limiting.
A roll call vote was taken on the MOTION to adopt Amendment
4.
IN FAVOR: Brown, Grussendorf, Navarre, Kelly, Mulder,
Parnell, Therriault, Foster
OPPOSED: Martin, Kohring
Co-Chair Hanley was absent from the vote.
The MOTION PASSED (8-2).
Representative Therriault pointed out that some people are
issued certificates. He questioned if "certificate or"
should be added to "policy." Mr. Koch responded that a
certificate rises out of a policy of insurance. He noted
that regulations can address any problems that arise
relating to the issuance of certificates.
Representative Mulder MOVED to report HCS CSSB 197 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CSSB 197 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note by the
Department of Public Safety; and with a zero fiscal note by
the Department of Commerce and Economic Development, dated
2/23/96.
ADJOURNMENT
The meeting adjourned at 9:50 a.m.
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