Legislature(1995 - 1996)
04/24/1995 01:12 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
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CSHB 226(HES) - MARITAL STATUS AND RETIREMENT BENEFITS REPRESENTATIVE PETE KELLY, bill sponsor, introduced HB 226. The superior court has recently decided that unmarried couples are entitled to the same employment benefits as married couples. This decision was a result of a broad interpretation of the language found in the Human Rights Act which prohibits discrimination based on marital status. The court concluded the human rights directive was violated when the University of Alaska refused health benefits to the unmarried partners of university employees. It is feared this decision will have a far-reaching impact, and that the trickle of grievances at the University of Alaska will become a flood in other state agencies and finally to private industry as well. It is not a stretch to imagine Alascom, NBA and AFL-CIO, being sued in the near future for failing to recognize domestic partners in their benefits packages. Because of the definition of "domestic partner" it is not grounded in contract and tradition, as is marriage. It is a moving target and therefore impossible to predict what future relationships would qualify under this umbrella. The superior court decision targets worker benefits to an unknown panoply of partners who are able to attach themselves to state employees. HB 226 intends to reduce the uncertainty employees face as a result of a decision in planning their compensation packages, and to pre-empt the possible onslaught of domestic partner relationships, created solely to gain potential benefits. He added that this is a fairly typical change throughout statute. What HB 226 in its original form attempted to do is found throughout statute. A judge said there was lacking legislative intent in a particular case. Because of that lack of legislative intent, the plaintiff was forced to assume that the prohibition on discrimination based on marital status was absolute. In fact, there are plenty of other examples, placed in the packets, five that we could find immediately. REPRESENTATIVE KELLY said the other thing is that he has had a lot of comments about this bill. A lot of people consider it a hate bill. The fact is if discrimination exists, he is not necessarily convinced, but maybe that is something we need to address. It cannot be done in this fashion, as the judge has done it, because of the broad sweeping impact it will have on businesses and state employees. We are setting up businesses to put a big target on them that says, "sue me." It will be a lawyer's dream and an administrator's nightmare, as lawyers take companies and state agencies to task, based on perceived discrimination, and an administrator's nightmare as they decide which domestic partner relationship they should cover, and which they should not - basically whose boyfriend or girlfriend gets to come in under the umbrella. If they do not do it just right, they are going to be sued big time. Some lawyers have said they could go back six years because of the statute of limitations and pull class action suits out of the hat because of this bill. He felt it was important not to address discrimination against domestic partners in this manner, and that we should adopt the original HB 226 before it was amended in the HESS Committee. That was his request. MARCIA BUCK, President, Parents, Families and Friends of Lesbians and Gays (PFLAG), testified in favor of the CS for HB 226. PFLAG, Juneau, was opposed to the original HB 226 because we believe it discriminated against our sons and daughters, and friends on the basis of marital status. At that time, we felt that to have proceeded in this legislature with that bill that was openly discriminatory and flew in the face of the Alaska Constitution, appeared to us to be unthinkable and reminiscent of governments in some other countries, past and present, where there was discrimination against the people that the government intended to serve. We are pleased with the CS which removes that discriminator language, and allows our sons and daughters and family members who enter into committed long term relationships and domestic partnerships to accept benefits equal to those for other partnerships such as marriage. We would not come to you for PFLAG, asking for special rights for our family members, but we would come to you for equal rights for family members who are gay and lesbian. MS. BUCK said the sponsors of the bill have stated that it was financially motivated, but we believe the CS as it now reads, defines and places reasonable parameters on the couples for whom benefits would be available, and does so in a manner that does not discriminate against people simply because they are homosexual. We believe the CS limits frivolous partnerships. MS. BUCK explained that her daughter lives near Corvalis, and her partner is employed by Oregon State University. She is covered under her partner's health insurance. When they first moved to Corvalis, they had no other health coverage, and it became crucial that this coverage was crucial for her since she had severe allergy problems when they first moved there. The criteria in Oregon is less stringent than the criteria proposed in this CS. Even though Oregon has financial difficulties, they have not found that to be a burden on the state of Oregon. In summary, PFLAG would like to go on the record of being in support of the HESS CS for HB 226, and in opposition to HB 226, as originally written. PATRICIA DOUGLAS, Member, Pharmacy Board, said this bill, working with HB 227, will ensure that there is no misunderstanding on what the law is in reference to health care for spouses only. The impact is not fiscally sound for businesses in the private or public sectors. She urged passage of these bills as originally presented. If we allow these to be forgotten, simply because it is an uncomfortable issue, Alaskan voters will see that you are drawing a line as a political statement. We need to address all issues that affect the traditional family. We need people in Juneau that are not afraid to stand up for all that is right, supporting traditional family values. She urged the committee's support of the original version of HB 226. TYSON NEVIL spoke in support of HB 226 via teleconference. He urged this protection of families that would otherwise be denied health benefits. Representative Kelly is asking that the bill be changed to eliminate the partnership clauses added in the HESS committee. If the partnership clause is dropped, the bill will be an attempt to economically punish individuals who choose not to marry into traditional families. Economically and emotionally committed families come in all shapes and sizes in today's culturally diverse America. He believed the current CS for HB 226 reflects that diversity. He urged the committee to support the CS. The original version is an effort to impose moral values and prejudices on all of us. The CS includes Alaskans who only want equal protection under the law. MARGARET BERCK, Attorney, Alaska Chapter of the American Civil Liberties Union, spoke in support of the CS adopted by the House HESS Committee. We believe the definition of domestic partnership as set out in that bill, would fair it out, frivolous relationships, and at the same time, would meet the constitutional concerns that we believe were at issue in this bill. From listening to other testimony that was presented before the House HESS Committee, there was a considerable concern regarding some of the impact that the legislation might have on private employers. The bill will not impact private employers. There is a federal law that essentially deals with private employers, and the state provisions in this legislation would not turn that federal law and the requirements that are set out in it. MS. BERCK understood that when you are an employee at the university, and you choose to cover your partner, that money comes out of your paycheck. You get less money, and that virtually the cost to the university is an administrative cost for adding on those individual people. The employee also bears the cost with respect to adding these individuals to the pool of insured individuals that are related to or somehow associated with employees at the university. CHAIRMAN PORTER did not think that was correct, that the employee was the one bearing the cost to add another person to the insurance policy. He understood that while the employee would contribute to this cost, there is an equal contribution by the employer, so that costs proportionately go up with the amount of people covered, but such a cost is above and beyond the administrative cost. MS. BERCK mentioned that studies have been done in other states where domestic partnerships are recognized and the affects that has had on insurance costs. She felt that on the larger scheme, the affect has not been significant. Number 400 MARK TUMEO, Professor, University of Alaska Fairbanks, testified via teleconference in favor of the CS. He is a litigant in the case mentioned about the cost of health care. The expense to a university per employee for health care insurance is approximately $100 to $150 per month. He urged passage of the CS. The CS will save the state money by allowing benefits for long term domestic partners. It will allow currently uninsured individuals to access insurance. The state will save money when uninsured individuals get injured in public facilities. For example, an uninsured woman who miscarries, can run up over $100,000 in medical bills. These costs will end up being paid by Medicaid. This bill will not affect private companies. It is clear from a recent United States Supreme Court ruling that the Employment Retirement Income Security Act passed in 1974, pre-empts state law as the court ruled on benefit issues. JAN SIEBERTS, National Bankers Association (NBA), was confused about the language on the second page, "Not withstanding the prohibition against employment discrimination on the basis of marital status under (a) of this section, an employer may refuse to provide benefits to a person because the person is not legally married to an employee of the employer without violating this chapter;" Does that mean we have to apply these insurance benefits to married people just because they are married to an employee? That is what it sounds like. CHAIRMAN PORTER thought that on line 30, "the employer may" is the operative provision. In other words, we are not saying that the employer provision is saying that an employer may not provide insurance for a traditional spouse, without violating this chapter, unless ... no, you are right. REPRESENTATIVE GREEN said you can refuse it unless it is (a) or (b). CHAIRMAN PORTER said you may have hit on something. He did not know if it was the original intent, but we do have the Co-Chairs of HESS here. One could read this, very strongly, that this says, "employers will provide insurance to spouses or domestic partners." He thought that was a contract that is within the power of the employer to provide it or not to provide it, based on their own agreement with their own employees. REPRESENTATIVE TOOHEY asked if we have an attorney present. CHAIRMAN PORTER answered that yes, we do. ANNE CARPENETI, Committee Aide, House Judiciary Committee, stated that the language was awkwardly drafted, but thought the purpose of it was to say that an employer may make a choice for giving employee benefits based on marital status if there is a marriage or domestic partnership. CHAIRMAN PORTER understood the law right now to allow an employer to engage in negotiations, and not get any insurance benefits, if that is the case. MS. CARPENETI added that at a certain point when an employer gives spousal benefits, then you run into the problem of the Title 18.80, which prohibits discrimination based on marital status. This is kind of an exception to that, the way it is drafted. It follows the way the statute is drafted, which is a little bit awkward to understand. Number 525 CHAIRMAN PORTER said this then would provide that if that decision is made, that you are going to provide health care benefits to an employee that has a family package with it, that you are not violating the statutory provisions of this chapter against marital or sex discrimination, unless you say we will not provide them to a legally married person, which is obviously contrary to the agreement was that you already established. Also, you won't refuse to provide them for a domestic partner as defined throughout this section. So it does not take away the ability of an employer to negotiate a health package. Basically, what the court decision says is that if you give benefits to a spouse, you must give benefits to a nonspouse. What we are saying is that a nonspouse means a domestic partner as defined by this, so that if you have a nonmarried relationship other than this domestic partnership, you may discriminate against them, and not provide them with health insurance, and you would not be violating the anti-discrimination statute. MR. SIEBERTS clarified that the way he understands it is that if we give insurance to our employees under this bill, we are not required to give the benefits to their spouses or their families. CHAIRMAN PORTER said that is correct. MR. SIEBERTS said they feel this will increase insurance rates to the banks. Our institution has 1,200 employees and provides insurance for spouses and families. Even though the employee has to contribute partially to that additional expense, our institution contributes substantially. If it substantially increased the cost of providing this benefit to our employees, we will likely eliminate the benefit to all of our employees, which, in our case would mean an additional 2,500 people that would be uninsured. Even for us, it is a pretty competitive world out there, and we have to keep our pencils sharp to compete with much larger and tougher institutions than we are, and he thought that little businesses throughout the state would be in the same boat. You should be aware that this could have negative repercussions on people who are insured today. We do not want to kick those people out of our plan; that is not the purpose. Number 600 REPRESENTATIVE BUNDE asked how substantial the increase would be. Would it be 15 percent, or 5 percent? MR. SIEBERTS said he did not know an exact amount. PAM NEAL, President, Alaska State Chamber of Commerce, stated that the cost to expanding benefits would increase the cost to the state of Alaska, and we have a concern considering that our number one priority as an organization is that state spending be reduced, not expanded. Therefore, she felt this could be a problem in that arena. Secondly, there is confusion coming from the hearing in HESS. We heard testimony from an attorney that said private employers would be impacted, and yet we have testimony saying that they will not be. We fear that private employers would be impacted, because even if they were not affected initially, as usually follows, there is a court case where someone sues because the state employees would be discriminated against if they were not covered, but private employees are not. There would be a debate about that in court, and eventually the private employers would come under it. But even if private employers do not come under it, and even if we are able to continue the practice of not offering benefits to anyone but our employee, and of course we do not even have to offer benefits to our employees. But those reasons that you offer benefits are all still there. You certainly like to have employees who are enjoying the benefits of good health care, because they are going to be better, healthier employees, and the other factor is the loyalty that offering good benefits provides. In this regard, we feel that the private sector is already handicapped by the benefits that are offered by the state of Alaska. It is quite difficult to keep employees in the private sector here in Juneau, if there is a state job open. They are gone to that state job immediately because we cannot compete with the state on the benefits that they already provide. With this expansion of benefits, it just creates a wider gap, and a greater disparity. We are concerned that the only pool to draw private sector employees from will become the group of those who cannot get state jobs. She felt it would be too costly for private employers if they tried to participate, and it is too costly for the state. Number 740 THOMAS OWENS, Attorney, testified via teleconference. He thought it would be worth checking to see if this legislation would be pre- empted by (indiscernible). He said they represent some of the workers at the University of Alaska. Judge Greene's analysis was very straight forward. She simply said that 18.80 prohibits discrimination based on marital status, change in marital status, or parenthood status, in providing health care benefits. If nothing changes, at least all state employees who are childless, for example, could use the law to say that because the state is paying for health care benefits for employees who have children, that discrimination against single employees or childless employees are entitled to the thought that the state would have to pay compensation to these people who do not have children so that they would be treated the same as the state is treating people who do have children. The implications of this decision, and the path that is before you are enormous regardless of whether it applies to the private sector or not. REPRESENTATIVE GREEN asked Mr. Owens what the affect would be on private employers under the CS version. MR. OWENS answered that the change to the bill literally creates a married-like status for those people who are not married, as regards health care benefits. There are over 100 provisions in state law that allow or require discrimination based on marital status, and the minute the bill passes, you are going to have to go and change all of those other state laws that require discrimination based on marital status. For example, the statutory provisions concerning the teachers' retirement system provides that an employee who is a participant in the teachers' retirement system is allowed to amend their beneficiary designations to designate, as a beneficiary, a dependent or a spouse, and it specifically uses the term "spouse." If you have this bill creating a "contract spouse" then you are going to have to go through the rest of the law and create that same opportunity for contract spouses, for example, under the teachers' retirement system. There are also provisions that limit benefits to spouses. If you eliminate those provisions for spouses in one statute, you will have to go through and eliminate the provision in other related statutes. Number 830 FRANK DILLON, Executive Director, Alaska Trucking Association, testified via teleconference. He stated the original intent of the association's board of directors was to support this legislation with the idea that this piece of legislation would limit the ability for nonmarried couples to enjoy the benefits of that employee's benefit relationship with the state. We certainly had not envisioned this analysis of the law being applied to the private sector and quite frankly it has been frightening. Our position has been to encourage the legislature not to give people who are not married the benefits of a marriage contract. The idea of a domestic partner further dilutes the importance of the marriage status. We would continue with opposition to this. It seems to be that the intent of this bill has changed a little. REPRESENTATIVE FINKELSTEIN thought that it was intended to NOT include private employers, and if the language was not clear enough, it could be amended to that effect. DANIEL COLLISON, Vice President, Southeast Alaska Gay and Lesbian Association, responded to some of the comments that were raised by Mr. Owens. First of all, Mr. Owens suggested that if this bill is adopted as it is, an unmarried, childless employee of the university could come in and justify the same type of reimbursement equivalent to those benefits provided for those employees who are married or who have children. That is not what the issue would ... TAPE 95-50, SIDE B Number 000 MR. COLLISON continued...the domestic partner status as a marriage- like status. He would dispute that. This domestic partner bill, though it provides for access to health care benefits does not allow for a whole host of other benefits that is automatically assumed when someone is married. An example of that is if he entered into a domestic partner arrangement with somebody else, that does not immediately assume that he has responsibility for their children. It does not automatically assume that given that individual guise, that he has the same access to a third of that individual's estate that a spouse does. So a domestic partner status is not the equivalency of marriage. MR. COLLISON stated that in the continuing discussion of HB 226, it is troubling to note how suppositions and allegations, rather than recent discourse have played in this debate. Supporters of the original bill, which denies domestic partner benefits to university employees, speculate that such benefits will be a financial burden to the university health care plan, and also put undue pressure on the private sector to adopt domestic partner benefits. Supporters of the original bill offer no empirical evidence for their ominous predictions. When he or his friends present studies which refute their positions, the opposition dismisses them as mere statistics tailored to fit a preconceived conclusion. But these studies are based, not on pie in the sky ideas of a rosy future, but on the concrete experience of actual employers. For example, prior to the adoption of the domestic partner benefits at the University of Iowa, researchers speculated that enrollment in the university health care plan would increase from a low of 2.6 percent to a high of 8.3 percent. However, the actual experience of the university, four years after it implemented its domestic partner benefits plan, has been an increase in enrollment of only .2 percent. In 1985, the city of Berkeley extended domestic partner benefits to its employees. At that time, the Kaiser Health Maintenance Organization with whom the city contracted for employee health benefits, imposed a monthly surcharge. This surcharge was based on estimates that the plan would result in more costly claims of domestic partners. After three years of experience it was established that the claims of domestic partners did not burden the city's health plan. This monthly surcharge was first reduced, and then eliminated. The experience of both the University of Iowa, and the city of Berkeley is consistent with nearly 200 other private businesses, public universities, and governmental employers who have adopted domestic care benefits. These employers typically find that enrollment edges up by only 2 percent to 5 percent. The employers see trifling cost increases in their health plans of between 1 percent and 3 percent. In most cases, health insurance premiums remain the same. Representative Kelly may continue with his dire warnings that domestic benefits burden health care plans, but the burden of proof remains with him to present this committee with the names of actual businesses, universities, and public agencies who have thus suffered. Representatives from the Alaska business community may yet warn of the pernicious influence of domestic partner benefits on private employers, but the CS does not even address the private sector. Even if it did, the task remains for them to present the names of employers who have discontinued their health plans, laid off employees, or closed their doors rather than front the extra cost of domestic partner benefits. MR. COLLISON mentioned that in Massachusetts and Virginia states which have extended domestic partner benefits to public employees, he knows of no instance where employers have restricted their health care benefits only to employees. If proponents of this amendment are content to cry dire warnings of a calamitous future, they would be better to focus not on domestic partner benefits but on state Medicaid costs. For if ours is to be a debate of speculation and supposition, the one area of mystery is how this amendment impacts state Medicaid costs. When an employer is refused health care coverage for his or her domestic partner, that partner often goes without insurance. When the same partner incurs catastrophic health care bills and cannot cover them, the state of Alaska steps in to foot the bill. Who among you can estimate when such a partner will incur such bills and for how much? He urged adoption of the HESS CS. KATE WATTUM, Professor, University of Alaska Fairbanks, testified via teleconference in support of HB 226 as currently written. MARK NEUMAYR, Attorney, University of Alaska Fairbanks, said the university prefers the original bill as opposed to the CS. The university's position on provisions of the original bill are consistent with the university's practice and the position taken in the Judge Greene's superior court decision. SCHOEN PARNELL, Director, Christian Coalition of Alaska in Anchorage, testified via teleconference. We support Representative Kelly's original wording for HB 226. He asked if there were any people in the hearing with a legal background, and wondered about Judge Greene's decision on creating a like-marital status for domestic partners. Can that allow a class action lawsuit against the state of Alaska or against other employers who offer benefits? Would they be able to go after back benefits? CHAIRMAN PORTER said we do have an attorney as an aide to the Judiciary Committee, but the question you are asking is in a specific body of law that we have not been able to look at in the last half hour. There is not anyone here right now who could give you an exact answer, but in his experience, an exact answer would be suspicious in any event, as this is obviously a question that could be argued from either side. MR. PARNELL thought that with the original language, a lawsuit of that nature could not be made, so passing the original version of the bill would alleviate the possibility of a lawsuit. Number 300 BEVERLY MCCLENDON testified via teleconference in support of the CS for HB 226. This bill allows for protection of employees and their family members. It is important to remember why the practice has been established for health benefits for dependents. This is to assist in the financial security of the family, thus allowing the employee to continue being a productive member of the work force. This security is important no matter how a family is defined. SARAH BOESSER, Representative, Committee for Equality, testified in support of the CS for HB 226. By incorporating financially interdependent domestic partners into the university's health benefit plan, this bill will no longer illegally discriminate on the basis of marital status. Including domestic partners is one of the recommendations made by superior court Judge Greene, and it is wise of this body to follow nondiscrimination law in this case. This bill will not cost the state a significant amount of money. In fact, it may save significant money, because by allowing employees to pay for the health care coverage of their financially interdependent partners, more Alaskans will be covered by private health care coverage, and there will be fewer citizens left to seek Medicaid at state expense. The bill would not increase premium costs to the university. There are a number of studies done by many businesses that were provided to the HESS Committee. All find that from 1 percent to 3 percent is the number of increase in enrollment, with no negligible premium increase. Aetna found only a 2 percent increase in the first year, and only a 1 percent increase for each year following. Aetna sees no increase in premiums as a result of domestic partners inclusion. TALMADGE BAILEY testified in support of the CS for HB 226. We have heard much talk about the cost of this bill. We have heard that people will turn to sham domestic partnerships and break the state treasury, yet studies do not support this position. CHAIRMAN PORTER concluded the public hearing on HB 226. REPRESENTATIVE FINKELSTEIN offered amendment one. It would change "employer" to "public employer" on page 2, line 30, so that it will be clear which employers this applies to. He would not mind extending this to private employers, but since that is not the intent of the bill, he chose to change the wording to "public employer." REPRESENTATIVE VEZEY objected. REPRESENTATIVE BUNDE asked if this was intended to include all public employers or only the University of Alaska. REPRESENTATIVE VEZEY felt the amendment makes it much worse, because we are setting up a standard which would make the university subject to nondiscrimination guidelines, while allowing other employers a different set of discrimination guidelines. We are setting up an exclusionary statute. REPRESENTATIVE FINKELSTEIN felt the only issue before us is public employers. CHAIRMAN PORTER said it is the intent of the amendment that whatever it is we are doing here is not meant to affect the private sector. Whether or not the private sector is vulnerable under that case decision is not clear. That is something that would have to be argued in court, so it is not reasonable for us to answer that question absolutely. REPRESENTATIVE KELLY mentioned that while he did not disagree with the amendment, in that it did protect private industry, he would only be satisfied with the original version of HB 226. A roll call vote was taken. Representative Finkelstein abstained. Representatives Vezey and Green voted no. Representatives Toohey, Davis, Bunde and Porter voted yes. Amendment one passed with a four to two vote. Number 640 REPRESENTATIVE GREEN said he would like to put his name on Representative Kelly's amendment and offer it as amendment two: Page 1, line 2: Delete "marital or domestic partners" Insert "spouses" Page 2, line 30, after "provide": Insert "health or retirement" Page 2, line 31, after "unless the person": Insert "is legally married to an employee; and" Page 3, lines 1 - 3: Delete all material. Page 3, line 5, after "provision of": Insert "a health or retirement" Page 3, line 7, through page 4, line 13: Delete all material. Insert "is legally married to an employee". REPRESENTATIVE TOOHEY objected. A roll call vote was taken. Representatives Vezey, Green and Porter voted yes. Representatives Bunde, Finkelstein, Toohey and Davis voted no. Amendment two failed on a four to three vote. REPRESENTATIVE BUNDE made a motion to move CSHB 226(HESS) from committee as amended with fiscal notes as attached. REPRESENTATIVE DAVIS objected. A roll call vote was taken. Representatives Vezey, Toohey, Bunde, Green and Porter voted yes. Representatives Finkelstein and Davis voted no. CSHB 226(JUD) passed, five to two.
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