Legislature(1997 - 1998)
03/26/1997 03:25 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 26, 1997
3:25 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery
Representative Bill Hudson
Representative Jerry Sanders
Representative Joe Ryan
Representative Eric Croft
Representative Gene Kubina
MEMBERS ABSENT
Representative Gene Kubina
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 14(JUD)
"An Act relating to insurance covering an insured who is a victim
of domestic violence and requiring certain disclosures by an
insurer."
- MOVED OUT OF COMMITTEE
OVERVIEW: Update to the Kennedy-Kassenbaum legislation.
(* First public hearing)
PREVIOUS ACTION
BILL: SB 14
SHORT TITLE: INS:DISCLOSURES; DOMESTIC VIOL. VICTIMS
SPONSOR(S): SENATOR(S) DONLEY, Ellis, Pearce, Duncan, Taylor,
Mackie, Kelly
JRN-DATE JRN-PG ACTION
01/03/97 17 (S) PREFILE RELEASED 1/3/97
01/13/97 17 (S) READ THE FIRST TIME - REFERRAL(S)
01/13/97 17 (S) L&C, HES, JUD
01/28/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
01/28/97 (S) MINUTE(L&C)
01/29/97 159 (S) L&C RPT 5DP
01/29/97 159 (S) DP: LEMAN,KELLY,MACKIE,MILLER,HOFFMAN
01/29/97 159 (S) ZERO FISCAL NOTE (DPS)
02/03/97 (S) MINUTE(HES)
02/03/97 214 (S) HES REFERRAL WAIVED
03/05/97 (S) JUD AT 1:30 PM BELTZ ROOM 211
03/05/97 (S) MINUTE(JUD)
03/07/97 624 (S) JUD RPT CS 5DP SAME TITLE
03/07/97 624 (S) DP:TAYLOR, MILLER, PEARCE,
PARNELL,ELLIS
03/07/97 624 (S) PREVIOUS ZERO FN APPLIES TO CS (DPS)
03/11/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
03/11/97 (S) MINUTE(RLS)
03/13/97 717 (S) RULES TO CALENDAR 3/13/97
03/13/97 719 (S) READ THE SECOND TIME
03/13/97 719 (S) JUD CS ADOPTED UNAN CONSENT
03/13/97 719 (S) ADVANCED TO THIRD READING UNAN CONSENT
03/13/97 719 (S) COSPONSOR(S): DUNCAN, TAYLOR, MACKIE,
03/13/97 719 (S) KELLY
03/13/97 719 (S) READ THE THIRD TIME CSSB 14(JUD)
03/13/97 719 (S) PASSED Y20 N-
03/13/97 726 (S) TRANSMITTED TO (H)
03/14/97 660 (H) READ THE FIRST TIME - REFERRAL(S)
03/14/97 660 (H) LABOR & COMMERCE
03/26/97 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
SENATOR DAVE DONLEY
Alaska State Legislature
State Capitol, Room 508
Juneau, Alaska 99801
Telephone: (907) 465-3892
POSITION STATEMENT: Sponsor of SB 14
JAYNE ANDREEN, Executive Director
Council on Domestic Violence and
Sexual Assault
P.O. Box 111200
Juneau, Alaska 99801
Telephone: (907) 465-4356
POSITION STATEMENT: Testified on SB 14
LAUREE HUGONIN, Executive Director
Alaska Network on Domestic Violence and
Sexual Assault
130 Seward Street, Room 501
Juneau, Alaska 99801
Telephone: (907) 586-3650
POSITION STATEMENT: Testified on SB 14
MARIANNE BURKE, Director
Division of Insurance
Department of Commerce and
Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
Telephone: (907) 465-2515
POSITION STATEMENT: Testified on SB 14 &
Presented Update on Kennedy-Kassenbaum
Legislation
ACTION NARRATIVE
TAPE 97-30, SIDE A
Number 001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee to order at 3:25 p.m. Members present at the
call to order were Representatives Cowdery, Hudson, Sanders and
Brice. Representative Ryan arrived at 3:31 p.m.
SB 14 - INS:DISCLOSURES; DOMESTIC VIOL. VICTIMS
Number 031
CHAIRMAN ROKEBERG indicated that the committee would consider
Senate Bill 14, "An Act relating to insurance covering an insured
who is a victim of domestic violence and requiring certain
disclosures by an insurer." He invited Senator Dave Donley,
sponsor of this legislation to testify.
Number 050
SENATOR DAVE DONLEY noted that this legislation, SB 14, passed both
the House and Senate last year, but due to time restraints was held
up at the close of last year's session. He referred to a letter
from State Farm expressing its support for this legislation and
mentioned that some minor changes have been made to the bill since
last year. The changes as noted garnered the support of this
insurance company, the National Association of Independent Insurers
and the American Council of Life Insurance.
SENATOR DONLEY stated that this legislation is supported by the
Division of Insurance. This legislation outlines that insurers in
Alaska cannot discriminate against victims of domestic violence
only on the basis that they were a victim of domestic violence.
Insurers must objectively rate people on the actual risks involved,
but they can't red-line an individual simply because a report had
been filed in relation to domestic violence. The insurance
companies must use objective criteria in determining how they
insure people. Several other states have adopted similar
legislation.
Number 190
REPRESENTATIVE JOHN COWDERY asked if this was medical insurance
they were referring to.
SENATOR DONLEY responded, "all kinds of insurance."
Number 216
REPRESENTATIVE BILL HUDSON asked if there was any indication of
this discrimination problem in Alaska.
SENATOR DONLEY responded that no specific examples of this kind
have happened in Alaska so far, although it's still frightening
because there are examples of this type of denial happening in the
Lower 48. A recent survey of 8 out of 16 largest insurance
companies have used domestic violence as a factor for rating
insurance. This legislation would make sure this same thing
doesn't happen in Alaska.
Number 278
REPRESENTATIVE ROKEBERG stated that last year there was a lot of
controversy about the release of information and asked if this
current legislation was silent on this issue.
SENATOR DONLEY responded that yes, it was. The industry is happy
with the way the legislation reads now, including the department.
Number 304
REPRESENTATIVE ROKEBERG noted that Section 21.36.440 doesn't have
anything to do with the main subject of this legislation per se.
This section deals with broader insurance issues.
SENATOR DONLEY responded that this section outlines that if an
insured is denied insurance then the insured may ask for the reason
for this denial. The insurance company upon receipt of a written
request would be required to explain its reasons for its refusal.
If an insurance company denies somebody who's been the victim of
domestic violence an insurance policy, they have to have a reason
other than domestic violence for doing so and must given another
legitimate reason for denial.
Number 452
JAYNE ANDREEN, Executive Director, Council on Domestic Violence and
Sexual Assault, came forward to testify on HB 33. The Council
supports this legislation. The Council is aware that
discrimination in the insurance industry is well documented
throughout the Lower 48. The types of discrimination they've seen
are increases in premiums, denial of coverage and denial of payment
for victims of domestic violence. This discrimination sets a very
frightening precedent for victims because it could result in
victims being unwilling to seek treatment or reimbursement when
something happens to them. This bill will go a long way in
protecting people from this kind of discrimination happening to
them.
CHAIRMAN ROKEBERG asked if Ms. Andreen had seen any improvement to
this problem in the Lower 48.
Number 565
MS. ANDREEN noted that Ms. Hugonin would be a better person to ask.
She's been more in touch with what's happening on a national level.
Number 600
LAUREE HUGONIN, Executive Director, Alaska Network on Domestic
Violence and Sexual Assault, came forward to testify on SB 14.
They also support this legislation. She noted that this
discrimination problem was still big down South. Several states
have introduced varying degrees of legislation to try to address
this problem. Some states have anti-insurance discrimination in the
health line, some in the life line, as well as, different policy
statements within their insurance commissions.
MS. HUGONIN continued that the National Association of Insurance
Commissioners is working on model legislation to try to encourage
states to address this problem. She stated that she was unaware of
this discrimination taking place in Alaska, but she appreciated the
chance to be proactive on this measure. The Network does sponsor
and administer a health insurance program for the domestic programs
throughout the state. Last year, when the network was preparing to
renew its health insurance, its broker said that they were having
trouble bidding the organization out. This person noted the reason
for this trouble was the network's line of business and their
domestic violence programs that it supports. This is something
insurance companies look at, notice and comment on.
Number 736
MARIANNE BURKE, Director, Division of Insurance, Department of
Commerce and Economic Development, came forward to testify on SB
14.
The Department supports this legislation. She concurred that
Section 21.36.440, as pointed out by Chairman Rokeberg, was a
consumer benefit and it is something that's long overdue. Everyone
should have the right to know why they've been turned down for
insurance coverage.
MS. BURKE stated that the industry was very concerned last year
about the need to disclose the reason for denial, but the industry
agrees with the latest wording in the legislation. The person
denied coverage must ask for the reason why. This eliminates the
burden placed on the insurance companies to automatically send an
explanation to every single person.
Number 874
REPRESENTATIVE HUDSON pointed out that he had read recently where
the state is going to start self-insuring. He assumed these
provisions would apply equally to the state. He wanted to make
sure for the record that any program the state became involved with
would carry equal responsibility along these lines.
MS. BURKE responded that there was a distinction. Self-insurance
is not subject to any of the provisions of Title 21. If the state
or any other employer elects to self-insure they are not subject to
these provisions or any other provisions under Title 21.
Number 874
REPRESENTATIVE HUDSON asked that if the state moved to self-
insurance whether this would come under Ms. Burke's Division or the
Division of Retirement and Benefits?
MS. BURKE briefly explained the difference between insurance and
self-insurance. Insurance pays premiums for coverage during a
particular period of time specified. Self-insurance is not
insurance in that an entity elects to keep this risk themselves.
Insurance transfers the risk to a company. This company takes this
risk in exchange for receiving a premium. Self-insurance means
that an entity keeps this risk, they don't transfer it.
Number 943
REPRESENTATIVE HUDSON said that it was his understanding that the
state was moving towards essentially providing insurance through
self-insurance, becoming literally their own insurance company. He
wanted to make sure that if the state does provide this substitute
for their employees, that the employees would be treated in this
same manner.
MS. BURKE responded that the Division regulates all insurance
companies in the state of Alaska, all those providing insurance,
the settlement of claims, anything that has to do with insurance as
defined of the transfer of risk they regulate. They have no
authority at all to regulate any self-insured entity. Business
entities such as Carr-Gottstein, BP, ARCO, etc., who provide their
own insurance are subject to federal regulation under the Employee
Retirement Insurance Security Act (ERISA). States are exempted
from ERISA also. The Division of Retirement and Benefits would be
totally in charge of and responsible for the state's self-insured
plan and would not be subject to Title 21 or ERISA.
Number 1067
REPRESENTATIVE JOE RYAN asked how they could keep these self-
insurers from discriminating against individuals.
MS. BURKE responded that if this were through Title 21, which this
legislation is under, it would have no impact on self-insurers at
all. This would have to be done through some other mechanism.
Number 1101
REPRESENTATIVE TOM BRICE stated that he shared the same concerns of
both Representatives Hudson and Ryan. He believed that the title
of the legislation would probably prohibit them from going into
self-insurer regulation without (indisc.) concurrent resolutions.
He stated that they should follow up on this issue with additional
legislation.
REPRESENTATIVE HUDSON moved and asked unanimous consent to move
CSSB 14(JUD) out of committee with individual recommendations and
accompanying zero fiscal note. Hearing no objection, CSSB 14(JUD)
was moved out of the House Labor and Commerce Committee.
Number 1232
MS. BURKE continued by updating the committee on the status of the
Kennedy-Kassenbaum legislation. Senator Drue Pearce has agreed to
introduce this legislation for the state of Alaska. The governor
signed the transmittal letter for the alternative mechanism to go
to the Secretary of Health and Human Services. Today the package
was mailed. This is the first step taken to preserve the state's
right to regulate health insurance.
MS. BURKE noted that the state was required to have this submitted
by April 1, 1997. There was a problem with getting this
legislation introduced and now she would be soliciting the support
of the legislature to assist in getting this legislation passed
during this session. The alternative is that the federal
regulators will regulate health care as of January 1, 1998 if the
state doesn't do so themselves.
Number 1300
REPRESENTATIVE ROKEBERG polled the committee informally as to
whether they would be opposed to introducing this legislation on
the House side as a committee bill. He asked if anyone objected to
this. He thought it would be appropriate to move this legislation
on both sides of the Legislature.
REPRESENTATIVE RYAN stated that he had no objections currently, but
suggested they take a look at it first before endorsing it.
Number 1345
REPRESENTATIVE HUDSON asked for two scenarios, the first, what if
the state didn't do this, he asked what the federal government
would do.
MS. BURKE responded that the federal government would have the
right to regulate all matters related to Kennedy-Kassenbaum. This
would in essence mean, no regulation. She pointed out that if
someone has ever taken a complaint to the Department of Labor and
tried to get a resolution, it's almost impossible. The worst case
basis is that this is the first step of the intrusion of federal
regulation over insurance in the states. There is a strong move in
Congress that's existed for about three or four years to take this
over. What this means to all the states is the loss of the ability
to tax premiums which represents about $30 million of unrestricted
general fund revenue for the state of Alaska.
Number 1404
CHAIRMAN ROKEBERG asked if the legislature should pass a resolution
or a temporary law in the interim.
MS. BURKE responded that she just returned from a meeting with her
colleagues from around the country. There is no provision in the
federal law for anything other than legislation. A possible
alternative might be to pass a law that uses the federal fall back,
but this would be very devastating to Alaska's market. The state
of Alaska has put in as an alternative mechanism the least
disruptive thing they can do to this market. There are
alternatives. They could have "guaranteed issue" insurance and
community rating. What's happened in other states on point has
been an unqualified failure in every state that they've done this
in. There's been an 85 percent increase in premiums.
MS. BURKE gave an example, one woman called their offices wondering
why they didn't have "guaranteed issue" insurance. They informed
her this option was not on their books. She responded that she was
newly pregnant and it was on an unexpected pregnancy, she needed
insurance. What this means is, if someone needs "guaranteed issue"
insurance they would go out and get it. When there is no longer a
need the individual can cancel it. This means that overall
premiums go through the roof. This is "guaranteed issue"
insurance.
Number 1522
CHAIRMAN ROKEBERG asked how they were doing on the high risk pool.
MS. BURKE responded that Senator Lyda Green is sponsoring this bill
and it's in legislative drafting right now. It should be
introduced in the next few days.
CHAIRMAN ROKEBERG asked if it spoke to the state self-insurance
program.
MS. BURKE responded that, no the bill does not. It addresses
administrative corrective issues discussed before which allows the
board the authority to run this in a business like manner.
Number 1558
CHAIRMAN ROKEBERG pointed out that they had discussed this
previously and its impact on the state's self-insurance. He asked
if she had had a chance to look at this.
MS. BURKE responded that she had and they have brought all of the
information provided last year up to date. The "gloom and doom"
presented by some of the testifiers has not proven to be the fact
at all. They have prepared a paper to bring the legislature up to
date and to show what has actually happened. The experience has
leveled off. The "sky is falling" predictions were that this was
going to go on a straight line up. It was based on the assumption
that there would be an unlimited number of people in the state of
Alaska and an unlimited number of people going into the plan. This
isn't the fact. The Division has the cold, hard numbers now. We
have computed the numbers of the state withdrawing from the insured
market and she would be happy to provide this to the committee.
Number 1640
REPRESENTATIVE RYAN referred to the issue of whether the state will
establish a Health Maintenance Organization (HMO) for state
employees and the legislature.
MS. BURKE responded that her division has not been involved in the
state's plan at all. She said she would have to defer on this.
CHAIRMAN ROKEBERG discussed the next scheduled meeting and
suggested that Ms. Burke return with an update on the "high risk"
pool, as well as further comments on the Kennedy-Kassenbaum
legislation. It was also suggested that the Division of Retirement
and Benefits be included to testify at this same meeting. Ms.
Burke noted a chairman of the "High Risk" pool board who would also
be willing to testify by teleconference.
ADJOURNMENT
Number 1740
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Committee
at 3:54 p.m.
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