Legislature(1995 - 1996)

03/27/1996 03:11 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                          
                         March 27, 1996                                        
                           3:11 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Pete Kott, Chairman                                            
 Representative Norman Rokeberg, Vice Chairman                                 
 Representative Beverly Masek                                                  
 Representative Jerry Sanders                                                  
 Representative Brian Porter                                                   
 Representative Kim Elton                                                      
 Representative Gene Kubina                                                    
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 All members were present.                                                     
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HOUSE BILL NO. 407                                                            
 "An Act relating to discrimination by certain insurers against a              
 person with a genetic defect."                                                
                                                                               
      -  HEARD AND HELD                                                        
                                                                               
 SENATE BILL NO. 168                                                           
 "An Act relating to financial institutions."                                  
                                                                               
      -  PASSED OUT OF COMMITTEE                                               
                                                                               
 CS FOR SENATE BILL NO. 197(L&C)                                               
 "An Act relating to insurance covering an insured who is a victim             
 of domestic violence and requiring certain disclosures by an                  
 insurer."                                                                     
                                                                               
      -  HEARD AND HELD                                                        
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 407                                                               
 SHORT TITLE: INSURING PERSONS WITH GENETIC DEFECTS                            
 SPONSOR(S): REPRESENTATIVE(S) DAVIES, Brown, Nicholia                         
                                                                               
 JRN-DATE     JRN-DATE             ACTION                                      
 01/10/96      2401    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/10/96      2402    (H)   LABOR & COMMERCE, JUDICIARY, FINANCE              
 01/24/96      2529    (H)   COSPONSOR(S):  NICHOLIA                           
 03/27/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
                                                                               
 BILL:  SB 168                                                               
 SHORT TITLE: FINANCIAL INSTITUTIONS                                           
 SPONSOR(S): LABOR & COMMERCE                                                  
                                                                               
 JRN-DATE     JRN-DATE             ACTION                                      
 04/26/95      1253    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 04/26/95      1253    (S)   FINANCE                                           
 02/21/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 02/21/96              (S)   MINUTE(FIN)                                       
 02/21/96      2486    (S)   FIN RPT  4DP 2NR                                  
 02/23/96              (S)   RLS AT 10:45 AM FAHRENKAMP RM 203                 
 02/23/96              (S)   MINUTE(RLS)                                       
 02/23/96      2512    (S)   ZERO FISCAL NOTE (DCED)                           
 02/28/96      2567    (S)   RULES TO CALENDAR & 2NR     2/28/96               
 02/28/96      2571    (S)   READ THE SECOND TIME                              
 02/28/96      2571    (S)   ADVANCED TO THIRD READING                         
                             UNAN CONSENT                                      
 02/28/96      2571    (S)   READ THE THIRD TIME  SB 168                       
 02/28/96      2571    (S)   PASSED Y17 N1 E2                                  
 02/28/96      2571    (S)   DONLEY  NOTICE OF RECONSIDERATION                 
 02/28/96      2576    (S)   RECON TAKEN UP SAME DAY  UNAN CONSENT             
 02/28/96      2577    (S)   PASSED ON RECONSIDERATION Y18 N- E2               
 02/28/96      2578    (S)   TRANSMITTED TO (H)                                
 02/29/96      2955    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/29/96      2955    (H)   LABOR & COMMERCE, FINANCE                         
 03/27/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
                                                                               
 BILL:  SB 197                                                               
 SHORT TITLE: INS:DOMESTIC VIOL. VICTIMS & DISCLOSURES                         
 SPONSOR(S): SENATOR(S) DONLEY, Ellis, Salo, Duncan, Pearce,                   
 Zharoff, Lincoln; REPRESENTATIVE(S) Davies, Robinson, Rokeberg                
                                                                               
 JRN-DATE     JRN-DATE             ACTION                                      
 01/05/96      2058    (S)   PREFILE RELEASED - 1/5/96                         
 01/08/96      2058    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 01/08/96      2058    (S)   LABOR & COMMERCE                                  
 01/16/96      2144    (S)   COSPONSOR(S):  DUNCAN                             
 02/15/96              (S)   L&C AT  1:30 PM BELTZ ROOM 211                    
 02/15/96              (S)   MINUTE(L&C)                                       
 02/20/96              (S)   MINUTE(L&C)                                       
 02/23/96      2512    (S)   L&C RPT  CS  5DP          NEW TITLE               
 02/23/96      2513    (S)   ZERO FISCAL NOTE TO SB & CS (DCED)                
 02/26/96              (S)   RLS AT 12:45 PM FAHRENKAMP RM 203                 
 02/26/96              (S)   MINUTE(RLS)                                       
 02/28/96      2568    (S)   RULES TO CALENDAR & 1NR      2/28/96              
 02/28/96      2571    (S)   READ THE SECOND TIME                              
 02/28/96      2572    (S)   L&C  CS ADOPTED UNAN CONSENT                      
 02/28/96      2572    (S)   COSPONSOR(S):  PEARCE, ZHAROFF,                   
                             LINCOLN                                           
 02/28/96      2572    (S)   ADVANCED TO THIRD READING                         
                             UNAN CONSENT                                      
 02/28/96      2572    (S)   READ THE THIRD TIME  CSSB 197(L&C)                
 02/28/96      2572    (S)   PASSED Y18 N- E2                                  
 02/28/96      2579    (S)   TRANSMITTED TO (H)                                
 02/29/96      2955    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/29/96      2956    (H)   LABOR & COMMERCE, FINANCE                         
 03/18/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 03/18/96      3186    (H)   CROSS SPONSOR(S): DAVIES                          
 03/20/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 03/20/96              (H)   MINUTE(L&C)                                       
 03/22/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 JOHN DAVIES, Representative                                                   
 Alaska State Legislature                                                      
 State Capitol Building, Room 422                                              
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-4457                                                    
 POSITION STATEMENT:  Presented sponsor statement on HB 407.                   
                                                                               
 MICHAEL L. LESSMEIER, Attorney                                                
 State Farm Insurance Company                                                  
 Lessmeier & Winters                                                           
 One Sealaska Plaza, Suite 303                                                 
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-5912                                                    
 POSITION STATEMENT:  Opposed HB 407; testified on SB 197.                     
                                                                               
 GORDON E. EVANS, Lobbyist                                                     
 Health Association of America                                                 
 Law Offices of Gordon E. Evans                                                
 318 Fourth Street                                                             
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-3210                                                    
 POSITION STATEMENT:  Opposed HB 407.                                          
                                                                               
 SHANNON McCARTHY, Legislative Assistant                                       
    to Representative John Davies                                              
 Alaska State Legislature                                                      
 State Capitol Building, Room 422                                              
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-4457                                                    
 POSITION STATEMENT:  Testified on HB 407.                                     
                                                                               
 JOHN L. GEORGE, Lobbyist                                                      
 American Council of Life Insurance and                                        
    National Association of Independent Insurers                               
 3328 Fritz Cove Road                                                          
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 789-0172                                                    
 POSITION STATEMENT:  Testified on HB 407.                                     
                                                                               
 WILLIS F. KIRKPATRICK, Director                                               
 Division of Banking, Securities and Corporations                              
 Department of Commerce and Economic Development                               
 P.O. Box 110807                                                               
 Juneau, Alaska  99811-0907                                                    
 Telephone:  (907) 465-2521                                                    
 POSITION STATEMENT:  Provided department's position and answered              
                      questions regarding SB 168.                              
                                                                               
 BECKY ACHTEN, Children's Counselor                                            
 Aiding Women from Abuse and Rape Emergency (AWARE)                            
 P.O. Box 22115                                                                
 Juneau, Alaska  99802                                                         
 Telephone:  (907) 586-3480                                                    
 POSITION STATEMENT:  Supported SB 197.                                        
                                                                               
 DAVE DONLEY, Senator                                                          
 Alaska State Legislature                                                      
 State Capitol Building, Room 11                                               
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-3892                                                    
 POSITION STATEMENT:  Provided sponsor position on amendments to               
                      SB197.                                                   
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-30, SIDE A                                                            
 Number 0001                                                                   
                                                                               
 CHAIRMAN PETE KOTT called the House Labor and Commerce Standing               
 Committee to order at 3:11 p.m.  Members present at the call to               
 order were Representatives Kott, Rokeberg, Sanders, Porter and                
 Elton.  Representatives Kubina and Masek joined the meeting at                
 3:13p.m. and 3:15 p.m., respectively.                                         
                                                                               
 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."                                                                        
                                                                               
 SB 168 - FINANCIAL INSTITUTIONS                                             
                                                                               
 CHAIRMAN KOTT brought SB 168 before the committee and noted it was            
 a banking issue resulting from the Riegle-Neal Interstate Banking             
 and Branching Efficiency Act passed by the federal government.                
                                                                               
 Number 0847                                                                   
                                                                               
 WILLIS F. KIRKPATRICK, Director, Division of Banking, Securities              
 and Corporations, Department of Commerce and Economic Development             
 (DCED), provided a brief history.  Some major national and                    
 international banks had, for the past ten years, pushed for                   
 breaking down the barrier of state boundaries.  In 1994, they were            
 successful in getting the U.S. Congress to pass the Riegle-Neal               
 Act, which gave states until 1997 to opt into or out of interstate            
 branching.                                                                    
                                                                               
 MR. KIRKPATRICK explained SB 168 had nothing to do with whether or            
 not there would be interstate banking or branching in Alaska.                 
 "That was taken care of when we recodified the banking code," he              
 said.  "But we were advised that the Riegle-Neal had some other               
 aspects about it that Alaska should address.  And that is what is             
 before us now.  They're part of the Riegle-Neal bill that will                
 become effective January of 1997, unless the state of Alaska does             
 something about it."                                                          
                                                                               
 Number 0955                                                                   
                                                                               
 MR. KIRKPATRICK referred to the first of three sections, which                
 addressed agency powers.  He explained, "And what this means is               
 that ... if a national bank put a branch across the street from a             
 state-chartered bank and offered all the powers that that national            
 bank had through its national organization across the continental             
 United States, the state-chartered bank, the small independent bank           
 across the street, could become an agent for another bank someplace           
 in the continental United States to provide the same services as              
 that particular branch of the national in-state branch coming into            
 the state of Alaska.  So, ... it provides for the ability of the              
 state-chartered banks existing in the state of Alaska to be                   
 competitive with any out-of-state branch bank coming in the state."           
                                                                               
 Number 1011                                                                   
                                                                               
 MR. KIRKPATRICK referred to Section 1(g) and said although a bank             
 could ask and get permission to perform agency powers, it could not           
 do anything illegal under state or national law.   "If the bank is            
 a part of a bank holding company system, you would have the Federal           
 Reserve limitations, you would have FDIC limitations and state                
 limitations, but at least the competitor across the street would              
 have the same limitations," Mr. Kirkpatrick explained.  "So, it               
 provides for an even playing field as far as the state-chartered              
 banks being competitive with the interstate branches in their                 
 business community."                                                          
                                                                               
 Number 1068                                                                   
                                                                               
 MR. KIRKPATRICK referred to the limitation on concentration found             
 in Section 2.  "To give you an example, Wells Fargo is in the                 
 process of purchasing First Interstate Bank of Alaska," he said.              
 "If Wells Fargo purchased Interstate Bank of Alaska and NBA and               
 First Bank of Anchorage, there would be a high concentration of               
 insured deposits under the control of one financial institution."             
                                                                               
 MR. KIRKPATRICK cited an example from Washington state where Bank             
 of America, Seafirst and Rainier had 73 percent of the state's                
 deposits under one controller.  The Washington attorney general's             
 office introduced an anti-trust bill as a result.  "So, what                  
 Riegle-Neal did was said that the states have until January of 1997           
 to make a determination as to what that level would be," Mr.                  
 Kirkpatrick said.  "If the states did not make a decision, that               
 level would be set by, and preempted by, Congress at 37 percent."             
                                                                               
 MR. KIRKPATRICK recounted that he asked the Alaska Bankers                    
 Association whether it should be left at 37 percent.  "It was the             
 bankers that came up and said that 50 percent would be a good                 
 figure," he said, indicating anything that would result in an                 
 acquisition of over 50 percent of insured deposits by an outside              
 entity would be prohibited.  "To give you an example of where we              
 are now, I think NBA itself has probably between 25 and 30 percent            
 of insured deposits in the state of Alaska," he said.  "So, it was            
 decided that we would put a level of concentration at 50 percent.             
 Everybody seems to agree.  I have no problem with that.  We find              
 that other states would generally not have problems with that."               
                                                                               
 Number 1245                                                                   
                                                                               
 MR. KIRKPATRICK referred to Section 3 and said a "depository                  
 institution" in the Alaska Banking Code or Title 6 was generally              
 defined as an institution whose deposits are insured by an agency             
 of the federal government.                                                    
                                                                               
 MR. KIRKPATRICK referred to Section 4 and said it was needed by the           
 state to communicate with other states on confidential information            
 concerning banks and branches across state lines.  "This is not               
 foreign to the state of Alaska because Key Bank has several banks             
 throughout the continental United States, and we have a                       
 responsibility to try to make a determination as to what the                  
 condition of the holding company is that owns and controls its                
 subsidiary banks," he said.  "This section of law allows us to ...            
 exchange information to other jurisdictions where we have an                  
 interest in the safety and soundness of our institution and they              
 have an interest in the safety and soundness of their institution             
 in another jurisdiction who has branches in our state."                       
                                                                               
 Number 1331                                                                   
                                                                               
 CHAIRMAN KOTT referred to Section 1, in which a number of time                
 lines were established, whereby if DCED did not act, a request                
 would be considered approved.  He asked Mr. Kirkpatrick to comment            
 on whether 60 days was sufficient time.                                       
                                                                               
 MR. KIRKPATRICK replied, "On the general banking business and                 
 banking services that are within the laws of the state and the                
 federal government, we generally know about those.  Now, we would             
 be able to respond very quickly.  If somebody wanted to set up a              
 service that would be real estate owning and managing, we would be            
 able to say immediately that we would probably want to have more              
 information on that, what is your expertise, what is your risk.               
 So, we generally know what the service field is.  So, when somebody           
 makes an application for us, with the institutions that we know, we           
 think that 60 days is ample time to respond."                                 
                                                                               
 Number 1415                                                                   
                                                                               
 CHAIRMAN KOTT referred again to Section 1, which said the                     
 department shall give appropriate notice to the public.  He asked             
 what that notice contained and what parameters DCED operated under            
 relating to public notice.                                                    
                                                                               
 MR. KIRKPATRICK responded, "Every time we do something ... under              
 Title 6, especially the banking code and the administrative chapter           
 of Title 6, ... we try to inform the public.  To give you an                  
 example we're processing right now, a trust company is coming into            
 the Anchorage area.  Now, we're not required by statute to give               
 public notice, but we are going to put in the Anchorage paper, and            
 probably the Fairbanks paper - and I don't know about Southeast -             
 but we are going to say what's going in, who they are, and where              
 they're going to be, and where to respond if you have any comments            
 or questions.  So, we try to do that, just administratively.  And             
 we will do the same with this.  As a marketing tool, the financial            
 institution is going to do it way before us, probably.  But as the            
 process, we will place a public notice advertisement saying this is           
 the action that we're considering."                                           
                                                                               
 CHAIRMAN KOTT asked if it was done on a regional basis or                     
 statewide.                                                                    
                                                                               
 Number 1506                                                                   
                                                                               
 MR. KIRKPATRICK replied it depended on the application.  "If, for             
 example, the bank is saying that they were going to offer these               
 services in Fairbanks, the Anchorage [area], part of the Interior             
 and Southeast, we would do the publications on a statewide basis,"            
 he said.                                                                      
                                                                               
 CHAIRMAN KOTT asked how long the public comment period was open.              
                                                                               
 MR. KIRKPATRICK replied, "We would hold it open for 30 days.  We              
 would always extend the 60 days if there was any question.  In                
 other words, if we ... felt that the public needed to comment, we             
 would extend the 60-day period for that period of comment."                   
                                                                               
 CHAIRMAN KOTT asked if that was for written comments or whether               
 there was a public hearing.                                                   
                                                                               
 MR. KIRKPATRICK stated, "On any protest or concern, we will offer             
 a public hearing."                                                            
                                                                               
 CHAIRMAN KOTT asked if it was a fair assessment that Section 1                
 offered Alaska's banks a more competitive arena for operating.                
                                                                               
 MR. KIRKPATRICK replied, "That's the sole purpose of this section."           
                                                                               
 Number 1583                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG asked about the effect of the preemption.             
 He noted it was a federal preemption and asked if there was a                 
 specific, codified dictate in the federal statute that would have             
 to be adopted if Alaska did not preempt it.                                   
                                                                               
 MR. KIRKPATRICK replied, "The Riegle-Neal bill sets out what there            
 will be.  And so, if we don't take action on this preemption, there           
 will be -- not be agency powers for the ... state banks.  There               
 will be agency powers for the national banks.  There will be                  
 interstate branching for national banks and there will not be                 
 interstate branching for state banks, as far as the services are              
 concerned."  Mr. Kirkpatrick then said he had misspoke and that               
 Alaska statute provides for interstate branching now.  "If we don't           
 pass this, I'm restricted as ... to what information I can give to            
 other jurisdictions," he said.  "I can share information with the             
 FDIC and the Federal Reserve but I can't share information with               
 other state jurisdictions."                                                   
                                                                               
 Number 1656                                                                   
                                                                               
 REPRESENTATIVE PORTER referred to Section 1(g), which said a state            
 bank may not, under an agency agreement, provide by itself through            
 an agent an activity that the state bank may not conduct under                
 applicable state and federal law.  Representative Porter asked:               
 "Well, if it can't, what is it having the agreement to do?"                   
                                                                               
 MR. KIRKPATRICK offered an example.  Alaska Bank of Commerce had              
 decided to provide services for which is did not have expertise.              
 They cut a deal with someone from First Interstate that resulted in           
 Alaska Bank of Commerce becoming a franchise of First Interstate              
 Corporation of California.  The sole purpose was to offer services            
 in Anchorage under the name Interstate Bank of Alaska.  Mr.                   
 Kirkpatrick concluded, "And so, what this will do is give the small           
 community bank an opportunity to be an agent for expertise outside            
 the state of Alaska."                                                         
                                                                               
 Number 1768                                                                   
                                                                               
 CHAIRMAN KOTT referred to Mr. Kirkpatrick's comment regarding the             
 50-percent-or-more concentration of deposits.  He asked what other            
 states were doing and whether their limits were higher, lower, or             
 flexible.                                                                     
                                                                               
 MR. KIRKPATRICK replied, "Other states have not found any                     
 particular problem with the 50 percent.  As you're a larger state,            
 and with a larger number of financial institutions, you find                  
 actually that the percentages go down.  So, it would be closer to             
 the 37 percent.  In the smaller states, it doesn't take too much to           
 build up that concentration very quickly.  We felt that 50 percent            
 would be appropriate for the state of Alaska.  We've had a great              
 deal of concentration in the last 20 years."                                  
                                                                               
 Number 1849                                                                   
                                                                               
 CHAIRMAN KOTT referred to the sectional comments, the last sentence           
 of which read, "Without action by the end of this session, the                
 preemptive provision of the Riegle-Neal Act become effective."  He            
 asked if that was accurate.                                                   
                                                                               
 MR. KIRKPATRICK replied he believed it was January 1, 1997.                   
                                                                               
 CHAIRMAN KOTT indicated that was something to think about for                 
 prioritizing.                                                                 
                                                                               
 Number 1919                                                                   
                                                                               
 REPRESENTATIVE ELTON moved that SB 168 move from committee with the           
 attached zero fiscal note and individual recommendations.  There              
 being no objection, it was so ordered.                                        
                                                                               
 SB 197 - INS: DOMESTIC VIOL. VICTIMS & DISCLOSURES                          
                                                                               
 CHAIRMAN KOTT brought SB 197 before the committee and noted it had            
 been heard before.  He opened public testimony for Becky Achten,              
 who had not testified previously.                                             
                                                                               
 Number 1982                                                                   
                                                                               
 BECKY ACHTEN, Children's Counselor, Aiding Women from Abuse and               
 Rape Emergency (AWARE), testified in support of SB 197.  She                  
 stated, "I've read that half of the 16 major insurance companies              
 use domestic violence as a criteria to deny coverage or increase              
 rates for victims.  This says to me that insurance companies                  
 recognize the economic cost of domestic violence in this country.             
 But in order to resolve this economic problem, insurance companies            
 re-victimize the victim.  Failure to pass this bill in a form which           
 ensures its intent to protect victims of domestic violence from               
 discrimination, which would deny them medical coverage or raise               
 their rates, is also a re-victimization.  The problem is domestic             
 violence.  The question is:  Are we going to recognize the gravity            
 of this problem by allowing insurance companies to deny coverage to           
 victims, or are we going to address the problem [of] domestic                 
 violence and support Senate Bill 197 and others before you aimed at           
 protecting victims, perhaps protecting them before they are                   
 injured?  Shame on the insurance companies for denying coverage or            
 raising their rates to those who have suffered injuries.  I invite            
 them to join and unite and address the root cause of the problem,             
 domestic violence."                                                           
                                                                               
 CHAIRMAN KOTT noted there was a committee substitute that had not             
 yet been adopted as a work draft, which added "or as required by              
 the division of insurance" at the bottom of page 1.                           
                                                                               
 REPRESENTATIVE PORTER pointed out there were additional changes.              
                                                                               
 CHAIRMAN KOTT called an at-ease at 4:43; the meeting resumed                  
 shortly thereafter.                                                           
                                                                               
 Number 2181                                                                   
                                                                               
 REPRESENTATIVE KUBINA moved that the committee adopt the work draft           
 for SB 196, version M, dated 3/26/96.                                         
                                                                               
 REPRESENTATIVE ROKEBERG objected for purposes of discussion.                  
                                                                               
 REPRESENTATIVE PORTER noted that Chairman Kott had mentioned the              
 addition on page 1.  He said the major change was a suggestion he             
 had worked out with the sponsor, which changed the disclosure                 
 requirement.  Instead of an insurance company being required to               
 automatically provide that information upon denial, the company               
 would advise anyone they denied of their right to have that                   
 information and if they received written notification, provide it.            
                                                                               
 Number 2332                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG withdrew his objection.                               
                                                                               
 CHAIRMAN KOTT noted the committee substitute for CSSB 197, version            
 M, dated 3/26/96, was before them.                                            
                                                                               
 Number 2353                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG offered an amendment, which read:                     
                                                                               
      Section AS 21.36 is amended by adding new sections to read:              
                                                                               
           Sec. 21.36.430  INSURANCE FOR DOMESTIC VIOLENCE VICTIMS;            
           (a)  An insurer offering life, disability or health                 
      insurance in Alaska may not discriminate against a victim of             
      domestic abuse based on an individual's status as a victim of            
      domestic abuse.  This prohibition shall not prevent an insurer           
      from underwriting or rating for a medical condition in the               
      same manner as they would for an insured or applicant who is             
      not a victim of domestic abuse.                                          
           (b)  This section applies only to an insured or applicant           
      for insurance.                                                           
           (c)  An insurer is granted immunity for criminal or civil           
      liability resulting from compliance with this statute.                   
                                                                               
 REPRESENTATIVE ROKEBERG stated he had provided letters from eight             
 or nine insurance companies throughout the country.  "This was an             
 amendment that was in Mr. Lessmeier's letter, I believe, of                   
 March15," he said, commenting that was in the packet and                      
 duplicated a recommendation by State Farm.  "We've heard testimony            
 from the bill sponsor that he does not care for this language," he            
 said.  "But we also heard testimony in this committee that the                
 insurance industry was duly informed, and so forth, and had no                
 objections to this bill.  And the letters you have in hand directly           
 oppose what that testimony was.  And I'd like to take exception to            
 that."  He listed the insurance companies that had provided                   
 letters.                                                                      
                                                                               
 TAPE 96-31, SIDE A                                                            
 Number 0001                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said, "What we don't want to do, I think,             
 particularly, and that's our charge in this committee, is to                  
 provide additional burdens on the insurance industry that are not             
 called for by any other type of classification of citizenry in this           
 country.  This is an extraordinary demand and I don't think we need           
 to do that to accomplish the purpose of this bill.  And I                     
 particularly take exception to the fact that ... the insurance                
 industry was duly represented at this table or in the Senate,                 
 because to my knowledge, they weren't.  And these letters speak for           
 that case.  So, that's why I'm bringing the amendment.  Also, the             
 amendment includes a deletion of the committee substitute section             
 (b), based on confidentiality.  Mr. Lessmeier's letter of                     
 March20th in your package clearly sets forward the lack of                    
 necessity of having this in the bill."  He specified he was                   
 referring to Section 1, subsection (b).                                       
                                                                               
 REPRESENTATIVE ELTON objected and then asked if Representative                
 Rokeberg had moved the amendment.                                             
                                                                               
 REPRESENTATIVE ROKEBERG moved the amendment.                                  
                                                                               
 REPRESENTATIVE KUBINA asked to hear from the sponsor.                         
                                                                               
 Number 0185                                                                   
                                                                               
 SENATOR DAVE DONLEY, sponsor of SB 197, said after consulting with            
 the Division of Insurance, he believed he could speak for them, as            
 well.  "We oppose this amendment for at least three reasons," he              
 stated.  "Number 1, it excludes specific lines of insurance from              
 coverage.  I guess if I was State Farm, I wouldn't want to have to            
 live under any new rules, either.  But this would say property is             
 no longer covered by the bill."                                               
                                                                               
 SENATOR DONLEY pointed out the committee had heard "horrific                  
 examples of discrimination against victims of domestic violence in            
 property lines of insurance".  He referred to the victim of an                
 arson attack, discussed in earlier testimony, whose insurance was             
 subsequently cancelled.  He referred to subsection (b) of the                 
 amendment, which said, "This section applies only to an insured or            
 applicant for insurance."  He said a third-party beneficiary could            
 be discriminated against on the basis of domestic violence, which             
 he believed was completely improper, as there may be other classes            
 of people who need protection from discrimination.                            
                                                                               
 SENATOR DONLEY said third, the amendment granted blanket immunity             
 that did not appear anywhere else in the insurance code for any               
 other action required of insurance companies.  Although insurance             
 companies had prohibitions against discrimination for reasons of              
 race and religion, for example, there was no blanket immunity for             
 any criminal or civil liability.  "No matter how they administer              
 it, how grossly negligent or even intentional their action was to             
 violate any other law that may conflict with this, they would be              
 granted blanket immunity," he noted.  "It just doesn't appear                 
 anywhere in the code like that.  And they've got all kinds of                 
 mandates in the code that they have to follow."                               
                                                                               
 Number 0370                                                                   
                                                                               
 REPRESENTATIVE ELTON said he had a couple of problems with the                
 amendment.  First was the assumption that life, disability and                
 health insurance were the only insurance lines that needed                    
 addressed.  He noted there was information in his packet compiled             
 by the Women's Law Project in Philadelphia, which indicated                   
 shelters in Vermont were having a tough time getting insurance due            
 to rejections and high rates because of domestic violence.  A                 
 homeowner's policy in Washington state had been cancelled by Safeco           
 after receiving information about domestic violence-related claims.           
 Also in Washington, a landlord's policy was cancelled because the             
 insurer learned the landlord intended to rent to a women's shelter.           
 "I think there are examples out there.  And for us to say the only            
 applicable lines of insurance are life, disability and health                 
 insurance is misleading and addresses only a portion of the                   
 problem," Representative Elton stated, adding that he had not even            
 addressed sections (b) and (c) of the amendment.                              
                                                                               
 Number 0554                                                                   
                                                                               
 REPRESENTATIVE ELTON referred to comments by Representative                   
 Rokeberg, sponsor of the amendment, that indicated the amendment              
 deleted subsection (b).  "I don't see where that happens," he said.           
                                                                               
 REPRESENTATIVE ROKEBERG replied, "Technically, this is supposed to            
 delete Section 1 and replace it."  He apologized for the confusion            
 and said, "If it's the will of the committee, I wouldn't look at it           
 as hostile to add property insurance into that.  I don't think                
 that's the intent here, to exclude that."                                     
                                                                               
 Number 0512                                                                   
                                                                               
 REPRESENTATIVE ELTON asked if Representative Rokeberg would object            
 to removing the delineation and just saying "offering insurance".             
                                                                               
 REPRESENTATIVE ROKEBERG indicated he would not object to that, if             
 it would be the proper wording to cover all insurance.  "We don't             
 want to have any discrimination," he said.  "I don't disagree with            
 that."                                                                        
                                                                               
 REPRESENTATIVE PORTER asked if the committee had done that or just            
 talked about it.                                                              
                                                                               
 CHAIRMAN KOTT clarified they had just talked about it.                        
                                                                               
 Number 0554                                                                   
                                                                               
 REPRESENTATIVE ELTON moved to delete "life, disability or health"             
 from the amendment.                                                           
                                                                               
 REPRESENTATIVE ROKEBERG interjected, objecting for discussion.  He            
 asked Mr. Lessmeier, attorney for State Farm, if he wanted to                 
 comment.                                                                      
                                                                               
 REPRESENTATIVE ELTON said he wanted to know the difference between            
 domestic abuse and domestic violence, since the amendment talked              
 about domestic abuse.                                                         
                                                                               
 Number 0600                                                                   
                                                                               
 MR. LESSMEIER claimed there was not, to his knowledge, a single               
 example of a problem in property/casualty.  "Our desire was to                
 limit the protection to where discrimination occurs," he said,                
 "which is in insurance over the person."  He responded to instances           
 cited by Representative Elton and said the first two dealt with               
 life insurance and the third was cancelled because of multiple                
 fires set in the home.  He said problems in Vermont with women's              
 shelters raised a concern of commercial insurance.  And the                   
 Washington state policy was denied because of multiple claims.  He            
 asserted there were no "valid" situations in the property and                 
 casualty business of discrimination based on status as a victim of            
 domestic violence.                                                            
                                                                               
 CHAIRMAN KOTT noted there was a call to attend a House floor                  
 session.  He said SB 197 would be heard first at the next meeting.            
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 There being no further business to conduct, CHAIRMAN KOTT adjourned           
 the House Standing Committee on Labor and Commerce meeting at                 
 4:58p.m.                                                                      
                                                                               

Document Name Date/Time Subjects