MINUTES OF THE ASSEMBLY COMMITTEE ON COMMERCE Sixty-eighth Session May 24, 1995 The Committee on Commerce was called to order at 3:38 p.m., on Wednesday, May 24, 1995, by the presiding Chairman, Sandra Tiffany, in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda, Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Larry L. Spitler, Chairman Ms. Sandra Tiffany, Chairman Ms. Maureen E. Brower, Vice Chairman Mr. Richard Perkins, Vice Chairman Mr. Dennis L. Allard Mr. Morse Arberry, Jr. Ms. Barbara E. Buckley Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Lynn Hettrick Mr. David E. Humke Mr. Michael A. (Mike) Schneider GUEST LEGISLATORS PRESENT: Assemblyman Jack Close, Assembly District 15 STAFF MEMBERS PRESENT: Paul Mouritsen, Research Analyst OTHERS PRESENT: Rose McKinney-James, Director of the Department of Business and Industry Bryn Armstrong, State Dairy Commission Karen Baggett, Deputy Director for the Commission on Economic Development Bill Welch, Executive Director of the Nevada Rural Hospital Project Renee Ashleman, Insurance Industry Jim Bish, Registered Nurse, Desert Springs Hospital in Las Vegas Tana Wisniewski, Registered Nurse, University Medical Center Sam McMullen, State Board of Nursing Tom Skancke, Las Vegas Convention Visitors' Authority Ande Engleman, Citizen Dr. Lexie Parker, Medical Savings Accounts Dave Horton, Committee to Restore the Constitution Ed Venn, State Legislative Chairman, American Association of Retired Persons (AARP) Marsha Berkbigler, Nevada State Medical Association Dr. Stephen Dow, Practicing Orthopaedic surgeon Janine Hanson, State President, Nevada Eagle Forum Following roll call, Chairman Tiffany announced the committee would first hear the amendments which had been proposed by Assemblyman Close for A.B. 528, and then the amendments being proposed by Ms. Buckley on A.B. 484. ASSEMBLY BILL 528: Makes various changes relating to mobile home parks. Opening the testimony, Assemblyman Jack Close, Assembly District 15, submitted written material describing the suggested amendments (Exhibit C), and proceeded with an explanation of the exhibit. Following Mr. Close's explanation, Mr. Hettrick said there were several points on which he had concerns. He questioned the language dealing with the landlord imposing an annual rent increase. He suggested adding language which would read, "If the landlord chooses to forego that increase, nothing prohibits him from imposing the increase sometime in the future." This was needed to make it clear if the landlord did not choose to impose the increase on an annual basis, but subsequently determined the increase was needed, there was the contingency for him to do that. Also, Mr. Hettrick wondered if the language on page 2, lines 17 and 18, "... the notice must include a description and an estimate of the cost of the proposed capital improvement. ..." would be better expressed by stating, "the proposed cost of the capital improvement and the rent increase that would be affected thereby." Also, the language of Section 4 was unclear and contradictory, Mr. Hettrick declared. Assemblyman Close discussed with Mr. Hettrick his areas of concern, with Mr. Close remarking it was his intent in the language of Section 3 to create a positive relationship between the landlord and tenant as opposed to an adversarial relationship. He indicated he would be willing to work with Mr. Hettrick and Legislative Counsel Bureau staff to craft less obscure language which would retain the intent, but be easier to understand. The amending language posed in item 2 of Exhibit C was questioned by Mr. Allard. He wondered if the intent was to make the provision entirely voluntary. Mr. Close indicated, "yes," the intent was to make it less mandatory, but he wanted to make it clear the rental agreement was available, although the tenant did not have to accept. This was further discussed. Referring to Section 4 regarding the tenants of the park approving capital improvements at a meeting of the tenants conducted by the landlord, Mr. Spitler remarked that often in meetings of this sort, it was very difficult to draw a quorum, which meant matters went unresolved for a very long period of time. He suggested when Mr. Close met with the Legislative Counsel, Kim Morgan, language be crafted to provide some means of overcoming these problems. Mr. Close agreed, and said he would take this into account. Although Ms. Buckley suggested the committee take action to amend and do pass Mr. Close's bill, A.B. 528, Chairman Tiffany indicated she and Co-Chairman Spitler had decided they would like to hold action until the amendments could be seen. ASSEMBLY BILL 484: Makes various changes relating to mobile home parks. Ms. Buckley submitted suggested amendments to A.B. 484 (Exhibit D), and reviewed and explained these for the committee. In addition to those shown in Exhibit D, Ms. Buckley said she wished to address the concerns regarding the "emergency rent fund" by removing this provision from A.B. 484, placing the provision in A.B. 473, and sending it on to the Committee on Ways and Means to consider if there was adequate funding. Calling attention to page 5, line 39 regarding the landlord paying the cost of the appraisal of the mobile home, Mr. Arberry wondered if this language was necessary. Ms. Buckley said the amendments of the last provision modified this section. The provision was duplicated in three different areas, all of them being modified. These provisions applied when the park was no longer going to be used as a mobile home park, which could involve instances of sale of the park to a new development, a decision of the landlord to do something else with the park, etc. It dealt with wholesale park closures. Thus, she believed the requirement for the landlord to pay for the appraisal was appropriate. This language was also questioned by Mr. Spitler. If it was by mutual agreement, he wondered why the landlord should have to pay the cost of the appraisal. Again, Ms. Buckley said, this section pertained to the situation in which the landlord converted an existing mobile home park into another use. She said she had no objection to specifying the cost would be split 50/50, if this was more agreeable to the committee. She did point out, however, these were instances in which the landlord chose to close down the entire mobile home park -- an event completely unforeseen by the tenant. Mr. Spitler opined if both parties were going to jointly agree upon who would do the appraisal, both parties should also share the cost of that appraisal. Mr. Hettrick asked the committee to again consider the language regarding the moving of a mobile home. Again, he believed the cost of the appraisal, if mutually agreed upon, should be split evenly. He suggested deleting the phrase, "... the landlord shall pay the cost of the appraisal of the mobile home ..." and adding the phrase, "... the tenant may accept the offer of the landlord. If the tenant does not accept the offer of the landlord, then they must each pay half." Ms. Buckley indicated she would be agreeable to this change in language. ASSEMBLYMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 484. ASSEMBLYMAN SPITLER SECONDED THE MOTION. Mr. Schneider questioned whether the Mobile Home Owners' Association (represented by Joe Guild) had agreed to Ms. Buckley's proposed amendments. She answered that Mr. Guild had received a copy of the amendments, and would have been in attendance if he had not had another commitment. In conversation, Mr. Guild had indicated to Ms. Buckley he would review the suggested amendments further, but at that time, although no serious objections had been raised, he had been non-committal. Clarifying what would be made part of the amendment, Mr. Hettrick drew attention to the language on page 4, lines 12 through 14. He indicated in order to make the language consistent the words "the fair market value must be determined by a person who appraises mobile homes mutually agreed upon." Fair market value was not an issue, he stated, and indicated he would like to see this as part of the amendment. However, Mr. Hettrick did not further amend the motion. THE MOTION CARRIED. (ASSEMBLYMEN BROWER, TIFFANY, ALLARD AND HETTRICK VOTED NO, ALL OTHERS VOTED YES.) ASSEMBLY BILL 581: Makes various changes concerning department of business and industry. A.B. 581 was brought before the committee for action, in order to be rereferred to the Committee on Ways and Means. The proponent of the bill, Rose McKinney- James, Director of the Department of Business and Industry, submitted "Suggested Technical Amendments to AB 581" (Exhibit E), and briefly reviewed the intent of the bill. Since A.B. 581 had been introduced, Ms. McKinney-James said there were interested parties who had expressed to her their concerns with the provisions. These, she said, were addressed in Exhibit E. The bill was the outgrowth of efforts the Department of Business and Industry had recently taken to clarify questions either unaddressed, or somewhat confused, in the wake of the reorganization of state government during the 1993 Session. Thus, there was the intent to define the role of the Department of Business and Industry and to clarify those aspects of the statutes in order to do several things: 1) To match the responsibility, as Director of the Department, with the authority which should be commensurate with that responsibility; 2) to establish the two principal points related to the budget in terms of the mission of the budget, i.e., access to capital; and 3) to obtain an understanding of the goals from the standpoint of information and referral. Continuing, Ms. McKinney-James said concerns had been expressed regarding the combination of the Commission on Economic Development with the Commission on Tourism, which would then become the Department of Economic Development and Tourism. She outlined what she saw as the mission of each entity, and opined that these missions were different. Ms. McKinney-James then submitted an outline of major sections of A.B. 581 (Exhibit F), and provided a section-by-section explanation. She told the committee that in her discussions with others, the need for the technical amendment related primarily to Section 3 of the bill, and the language the Department had developed to date was set forth in Exhibit F. With regard to the provision on Alternate Dispute Resolution (ADR), Mr. Humke noted there was an example of enforcing a covenant not to compete. He wondered if this provision was allowed in state statute. Ms. McKinney-James explained this example had been taken from an experience with the Labor Commissioner. Mr. Humke asked if the Labor Commissioner's Office had defended the employee referred to. Ms. McKinney-James replied, "yes," the Labor Commissioner dealt with matters relating to wages, etc., which led to a number of hearings for matters of this nature. It was hoped that rather than such matters going to a full-blown hearing, ADR could be used in arriving at a satisfactory settlement. Mr. Humke said he neither felt comfortable, nor did he think it was appropriate, for the state to provide a legal defense for a person who found themselves involved in an action involving a covenant not to compete. Ms. McKinney-James offered to provide Mr. Humke with a copy of that portion of the statute which provided the Labor Commissioner with the authority to deal with such matters. Mr. Schneider submitted for committee information, a letter from Lansford Levitt, Executive Director of the Nevada Dispute Resolution Services (Exhibit G), which had indicated support for A.B. 581. Ms. McKinney-James observed she fully expected the technical amendments to this bill to increase, and to the extent the committee had questions, she welcomed the opportunity to discuss these questions before the bill was again heard in the Committee on Ways and Means. She admitted to some frustration in coming into a Department which had been established fairly quickly, and she said they had clearly identified in many of the various 29 agencies making up the Department, weaknesses in the following areas: Personnel, oversight, accounting and data processing. She said it would be her goal ultimately to centralize those services and to provide them through the Director's office. Referring to the last page of Exhibit E, Mr. Hettrick remarked on the language, "... Any balance remaining in the account at the end of a fiscal year may be: ...". He believed this was vague, and that the language should be more specific. He was also concerned with language dealing with Capital Improvement Projects on page 3, lines 44 through 48 of the bill, and the language dealing with hospitals, page 3, lines 37 and 38. This language, Ms. McKinney-James said, was negotiated by the hospitals and the administration some years ago. Mr. Hettrick remained unenthusiastic. He then called attention to page 4, line 26, which drew the State Dairy Commission under the Department of Business and Industry umbrella. He noted this Commission was entirely self-funded, as were some of the others, and he was not convinced it was vital to bring them under the Business and Industry umbrella. In answer, Ms. McKinney-James pointed out the bill on reorganization had specified that the State Diary Commission was to be created within the Department of Business and Industry. Thus, it followed that if she was going to be responsible, then from the management standpoint, the lines of continuity, responsibility and reporting needed to be clearly articulated. If it was not the Legislative intent to follow the plan for reorganization, then she needed to be apprised of the fact. Mr. Hettrick asked what her position would be if the Dairy Commission did not want to be brought into the Department. Ms. McKinney-James brought attention to the existing law as shown on page 5, line 9 of A.B. 581. If the Dairy Commission was not part of the Department, Ms. McKinney-James said there would be: 1) A fiscal impact, in that the Department had no independent revenue stream, and were funded based on a cost allocation from all the entities within the Department; and 2) the authority for the Dairy Commission to engage in many regulatory actives was directly tied to being a part of a state agency. She indicated she would be more than willing to work with the members of the Dairy Commission to establish a cooperative, working relationship. Responding to the Chairman's admonition to only testify if it was considered essential, Bryn Armstrong, the Executive Director of the State Dairy Commission, told the committee he had been instructed by the Chairman of the Dairy Commission to express his concerns about some of the language in the bill. Since the bill was to be rereferred, he said he would hold most of his comments until the bill was heard in the Ways and Means Committee. Testifying on behalf of the bill, Karen Baggett, Deputy Director for the Commission on Economic Development (CED), said they would certainly support Sections 2 and 3, and an office of financing for business within the state because it would provide an excellent marketing tool for Nevada. She indicated her desire to make certain the Legislation would not interfere or conflict with any current statute establishing CED responsibilities. ASSEMBLYWOMAN GIUNCHIGLIANI MOVED DO PASS WITH NO RECOMMENDATION AND REREFER TO THE COMMITTEE ON WAYS AND MEANS. ASSEMBLYMAN ALLARD SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT. (ASSEMBLYMEN ARBERRY, BROWER AND SCHNEIDER WERE ABSENT FOR THE VOTE.) ASSEMBLY BILL 545 - Requires state board of nursing to issue licenses to practice nursing to certain applicants without examination. Opening the testimony in support of A.B. 545, Bill Welch, Executive Director of the Nevada Rural Hospital Project, submitted his testimony (Exhibit H), and read his remarks into the record. Ms. Tiffany asked how many openings there were for nurses right now in the rural communities. Mr. Welch said as of last week, the hospitals reporting had indicated 23 vacant positions, which was a normal condition. While Fallon reported a great shortage, Elko, Ely, Battle Mountain, and Caliente were also recruiting. The reason they were recruiting for Canadian nurses, he remarked, was because the Canadian process was much easier to work through. It was also determined the Canadian educational program was more conquerable to the United States, as was the licensing process. In response to Mr. Allard's comment regarding assurances the Canadian nurses would go to the rural communities, Mr. Welch said there were no guarantees, but they had had positive experiences in recruiting Canadian nurses to the rural communities in the past. In reference to training and licensing, Mr. Welch indicated it was his understanding that the Canadian and the Nevada requirements were quite similar. If this was true, Ms. Brower wondered why the Canadian nurses would object to taking the Nevada test. In response to Ms. Giunchigliani's question regarding testing procedures, Mr. Welch agreed that currently a Canadian nurse could apply and sit for the Nevada state board examination, which was a national test. Ms. Giunchigliani said she supported reciprocity, but wished to have more information regarding standards. As the administrator of Elko General Hospital, which had been over three years ago, Mr. Welch said during his last year, the hospital medical community had paid over $360,000 to bring temporary and registered staff into the hospital; and a big portion of that money was spent on nursing which included respiratory therapy, radiology and some medical. Interjecting testimony for Jim Wadhams, who, in turn represented the Nevada Hospital Association, Renee Ashleman, stated the shortage being testified to was real, and in fact, he believed there were a number of statutes which set aside the rural communities in various matters. Still investigating the possibility of statutorily guaranteeing the additions to the rural communities, Mr. Allard suggested adding language to page 1, lines 7 and 8, which would generally state that after passing an examination required by that jurisdiction, the nurse would agree to practice in a county with a population less than 100,000 for an indefinite number of years. Mr. Ashleman said the statutes he had referred to did not function in that fashion. These statutes generally stated that the relaxed standards did not turn them into a grandfathered proposition. Also addressing Mr. Allard's question, Mr. Welch commented there had been a time when the rural hospitals were able to work out scheme with the Nevada State Board of Medical Examiners to bring in physicians who did not necessarily meet all the requirements for full licensure. Under this scheme the physicians were allowed to come into counties with a population of less 100,000, required to work two years, and at the end of this time were free to move to another part of the state. Jim Bish, registered nurse at Desert Springs Hospital in Las Vegas and representing the Service Employees International Union, Local 1107, spoke in opposition to A.B. 545. He submitted his testimony (Exhibit I) and read his remarks into the record. Also in opposition to the bill, Tana Wisniewski, a registered nurse at the University Medical Center and spokesperson for the Las Vegas Health care Action Committee, submitted her testimony (Exhibit J) and read it into the record. While she supported reciprocity, Ms. Giunchigliani said she believed the nurses should be given the same test, and be subjected to the same type of standards. She asked if, in fact, the bill would serve to remove the current practice in which Canadian nurses sat at the same test as their United States counterparts. Ms. Wisniewski said, "yes," the bill would allow Canadian nurses to work here without taking the examination. Mr. Fettic asked if there had been any movement on the part of the nursing community to see that the rural communities were provided with nurses. Ms. Wisniewski said they were very concerned with the problem, but believed the bill provided only a short term remedy for a wide problem. While she could see the reason for the proposed legislation, she also saw major problems arising in the future if it was enacted. Ms. Wisniewski objected to the bill confining the provision to Canadian nurses, and wondered if there would be exceptions made for other groups in the future. Not only did this open the door to further exceptions, she also believed the standards would suffer if not maintained across the board. Speaking in opposition, Sam McMullen, representing the State Board of Nursing, submitted three exhibits: 1) A letter of testimony from Lonna Burress, Contact Person for the Nevada State Board of Nursing (Exhibit K); 2) National Council Report on CNATS and NCLEX (Exhibit L); and 3) a statement on the effects of A.B. 545 (Exhibit M). Mr. McMullen stated definitely, the State Board of Nursing had nothing against Canadian nurses in general or in specific. As currently written, however, A.B. 545 applied to only Canadians, and was thus biased. Currently, one test was offered in Nevada which applied to everyone, and there was nothing to prohibit the Canadian nurse from taking that test and practicing in a rural community. Mr. McMullen did not indicate there was a deficiency in Canadian training and standards, and called attention to the information in Exhibit L for a fuller comparison of the tests used in each nation. Noting that both Canadian and Nevada standards were similar, Mr. Allard voiced his concern for his rural constituents who were in real need of nurses. He and Mr. McMullen discussed the legality of imposing restrictions, with Mr. McMullen stating the preference of the State Board of Nursing would be to keep the licensure standards the same. Most of the incentives given to rural health had been done in modification of scope of practice, or as generally practiced in the nursing area across the country, delegation of certain nursing functions. Mr. Allard reiterated there was a definite problem in the rural communities, and he challenged Mr. McMullen to devise an alternative if the proposal presented by A.B. 545 was unpalatable to the State Board of Nursing. Ms. Giunchigliani said she appreciated the shortages experienced in both the rural communities and in city hospitals. What she saw as the problem creating the condition was not only rural living conditions, but also poor pay. Perhaps different standards or incentives were needed rather than potentially reducing the qualifications. The issue was not whether the nurses could pass the test, but rather it was an issue of recruitment. Mr. McMullen said the Nursing Board was certainly interested in not only helping with the problem, but also in presenting quality care everywhere in Nevada. He indicated his willingness to consider alternatives. Ms. Buckley said she was persuaded with the need, and wondered if it was possible to offer a limited license which would apply only to the rural community. Mr. McMullen said he could not respond to this, but he would be happy to pass it on to the Nursing Board. It was Mr. Fettic's opinion that perhaps an increase in wages would achieve the goal of motivating nurses to seek the rural community. ASSEMBLYMAN ALLARD MOVED TO AMEND AND DO PASS A.B. 545. Explaining, Mr. Allard suggested the following amendments: On page 1, line 8, delete the word "or" and add, "... and if they agree to practice in a county of less than 100,000 or ...". Ms. Giunchigliani did not believe Mr. Allard's amendment would serve to offer an incentive. She believed it was the location and the wages which were the problems, not only for nurses but also for doctors, psychiatrists, etc. Ms. Buckley said she was not comfortable voting until Mr. McMullen returned with input from the State Board of Nursing. Mr. Spitler opined the State Board of Nursing was clear in their handout (Exhibit M). This was not a "Canadian" issue, he said. This was an issue of qualifications. Secondly, Mr. Spitler said he was concerned with the Board of Nursing statement that passage of A.B. 545 in its present form would expose the Board to litigation for not treating all foreign graduate groups in a similar manner, giving Canadian nurses preferential treatment over nurses licensed in other states and/or countries. MR. ALLARD WITHDREW HIS MOTION TO AMEND AND DO PASS. ************* ASSEMBLYMAN HUMKE MOVED TO INDEFINITELY POSTPONE A.B. 545. ASSEMBLYMAN BROWER SECONDED THE MOTION. While Mr. Spitler did not think the bill, as written, could receive favorable action, he did respect Mr. Allard's request to look at the legality and possible means of coping with the problem. Mr. Spitler said he would not support the bill if there was anything in the bill the State Board of Nursing did not approve of, nor would he vote for anything which required one group of people to take the test, while not imposing the same rule on others. He did not, however, wish to support the motion to Indefinitely Postpone until alternatives were studied further. In light of the opinions expressed by Mr. Spitler, Mr. Humke said he would withdraw his motion. ASSEMBLYMAN HUMKE WITHDREW HIS MOTION TO INDEFINITELY POSTPONE A.B. 545. ASSEMBLYMAN BROWER WITHDREW HER SECOND. ASSEMBLY BILL 582 - Revises provisions governing right of publicity. Offering testimony in support of the bill, Tom Skancke, representing the Las Vegas Convention Visitors' Authority, submitted a memo from Myram Borders, Bureau Chief of the Las Vegas Convention and Visitors Authority (Exhibit N). For committee information, he said the Convention Visitors' Authority received requests throughout the year to use photographs of special events, and that Ms. Borders' memo explained the gist of the bill which would allow use of the photographs for publicity reasons only -- not as advertisements. Mr. Spitler noted that Mr. Skancke had been asked at the last minute to stand in for Ms. Borders, who was unable to attend the committee hearing. Chairman Tiffany pointed out the Commission on Economic Development had authored the bill, but had not chosen to come before the committee to testify. Opposing the bill, Ande Engleman, testifying in her own behalf, did not believe the bill served to do what Ms. Borders had set out in her memo. Ms. Engleman stated the bill was nothing more than government's invasion into an individuals's right of privacy, and she went on to describe hypothetical situations illustrating the negative aspects which would be provided by the bill. She took issue with the language on page 1, lines 7 through 9, defining Government agency. Also, on page 2, lines 9 through 12, the language was far too broad and permissive. Mr. Spitler acknowledged Ms. Borders probably had something much different in mind than the hypothetical situations posed by Ms. Engleman. He wondered if this was correctable so there would not be the abuses suggested by Ms. Engleman. Ms. Engleman stated she believed the language could be crafted to achieve what Ms. Border's had in mind, and agreed to meet with Mr. Skancke to devise more appropriate language. ASSEMBLY BILL 592 - Provides for administration and disposition of medical savings accounts. Representing the Nevada State Medical Association, Marsha Berkbigler offered supporting testimony, telling the committee that medical savings accounts were part of the Health Access Nevada package the State Medical Association had been working on for the past four years. It had been their mission and intent to address the overall problem of the medially indigent, those people who were the working uninsured, and to lower the cost of medicine. Ms. Berkbigler then turned the testimony over to Dr. Lexie Parker, the author of the bill, and a person who Ms. Berkbigler stated was an expert on the issue. Indicating that medical savings accounts were not new, Dr. Parker explained this concept had only come to the forefront in the last few years, and since health care financing had become such a crisis situation. The scheme offered the opportunity to take the traditional premium paid on a monthly (or annual) basis, and instead of paying the entire premium to a health insurance company, which might or might not be used, dividing the premium into two parts: 1) Catastrophic illness policy; and 2) a private savings account which accumulated throughout the year. The employee for whom this account was issued could then draw from that savings account throughout the year to pay for incidental medical expenses such as annual checkups, mammography, prostate exams, etc. In the event of a major medical problem with extensive medical care, the first $3,000 was the responsibility of the employee or patient and would come out of the medical savings account. After the $3,000 deductible was met the catastrophic policy came into effect. This not only protected the person from bankruptcy by a medical illness, but at the same time produced an incentive for people to be cost conscious of the health care they purchased. Where this was implemented, Dr. Parker said it had resulted in dramatic reductions of health care expenditures. She pointed out each experiment with medical savings accounts had succeeded. In the short run, Dr. Parker continued, this scheme offered patients the opportunity to control their healthcare decisions, i.e., who their physicians, pharmacists and/or hospital would be, when they would be seen and what procedures or testing would be done. This placed control in the hands of the person and their primary care giver and out of the hands of the bureaucrats. Chairman Tiffany ascertained the $3,000 covered the entire family. In discussion it was learned there was a $120 premium for the catastrophic portion of the account, a $3,000 deductible and a $1 million limit. As for preexisting conditions, Dr. Parker indicated each insurance company would compete and write its own policy, and the details would be addressed on an individual policy basis or through group policies. Eligibility was not guaranteed nor were rate changes guaranteed in this legislation. Ms. Giunchigliani asked how "family" was defined on a national level, and in response, Dr. Parker said this was individual in each state. Ms. Giunchigliani also questioned if the scheme was with the agreement of both employer and employee, and Dr. Parker indicated a qualified "yes." The intent of the bill was to require agreement of both parties, although the employer had the option of telling the employee what kind of insurance he was going to offer. Ms. Giunchigliani did not believe the bill was clear on the intent in this regard, an opinion echoed by Ms. Buckley. Ms. Berkbigler said nothing in the bill was intended to be mandatory in any way, or to force an employee to accept a particular type of program not already in the insurance policy or offered by the company. The entire intent of the legislation, Ms. Berkbigler explained, was to provide a means by which small companies who were unable to insure their employees were able to purchase catastrophic insurance at a lower rate, and to place a certain amount of money into an account for their employee to use. This was simply enabling legislation. Ms. Berkbigler told the committee the federal government intended to address this issue in Congress during 1995, and would probably reinstated the policy of using pretax dollars for medical IRAs. Legislative encouragement was needed for insurance companies to write this type of insurance. In response to Ms. Buckley's confusion, Dr. Parker explained, using hypothetical examples. The major advantage, Dr. Parker said, was that at the end of a year, whatever money was left over in the medical savings account was the employee's money. Ms. Buckley noted the issue of core benefits was a non-issue. There were no core benefits. Chairman Tiffany reiterated this was just enabling legislation, and the decision for the Legislature was whether to enact legislation which would allow the state to have the insurance company write this type of policy. Mr. Humke and Dr. Parker discussed the issue of IRS taxes and the language on page 1, line 3. Mr. Humke also questioned what problems had arisen with the division of marital assets in a divorce. Dr. Parker indicated she did not know how these things were affected. The accrual of interest on the account was also questioned by Ms. Giunchigliani, who admitted some of these questions created confusion with the bill. After some discussion, Chairman Tiffany suggested Ms. Berkbigler confer with the Insurance Commission regarding appropriate language to deal with taxes. Ms. Buckley asked if anyone in the insurance industry had looked at this concept. Dr. Parker said there were currently five insurance companies writing Medical Savings Account policies, although none of these were in Nevada because the enabling legislation was not yet in place. Actually, Nevada insurance companies had reviewed this legislation, Ms. Berkbigler stated. She related a conversation with Jim Wadhams (representing the insurance industry), in which Mr. Wadhams had said to his knowledge there was no opposition to this bill. To also testify in favor of the bill, Janine Hanson, State President of the Nevada Eagle Forum, came forward and told the committee the forum had been very active in the development of the Medical Savings Account concept on a national level. She suggested there were two reasons Medical Savings Accounts were growing in popularity: 1. Cost. Medical Savings Accounts could help to cut health care costs by 50 percent, and no other approach to health care had even claimed to do this. The $3,000 (average) an individual had at his disposal put the employee in control of the determination of how to spend that money; 2. Choices. Many companies were forcing individuals into managed care. Medical Savings Accounts provided choices of doctors and the type of medical care needed. Addressing the question of whether these were part of the employee's wages, Ms. Hanson said nationally, the $3,000 benefit was considered a benefit given by the employer, and not coming out of the employee's wages. This needed to be clearly defined in the bill. What was missing in the Medical Savings Accounts, she said, was a resolution to Congress which would ask them to pass a national Medical Savings Account deductible from income tax, thereby increasing the benefit to the individual person. Ms. Hanson submitted a copy of the Resolution passed in the state of Utah (Exhibit O). Dr. Stephen Dow, a practicing Orthopaedic surgeon, submitted a handout entitled "Point of View - Urges support for Health IRA," (Exhibit P), and told the committee often Medical Savings Accounts offered the potential to significantly reduce administrative costs. He said it had been estimated that only 10 percent of Americans spent more than $3,000 a year in medical costs, so if Medical Savings Accounts were implemented, insurance companies and third-party providers would be taken out of the loop for basic medical costs. Insurance, while it might be an efficient way to take care of major medical expenditures, was very inefficient in dealing with relatively small medical expenditures. If Medical Savings Accounts were implemented on a national level, a savings of over $33 billion a year had been estimated in administrative costs alone. Also, in Nevada there were high health costs related to inappropriate lifestyles, i.e., smoking, alcohol and drug abuse. Many companies that had successfully implemented Medical Savings Accounts had been even more successful with combining them with incentives for the employee to follow appropriate lifestyle habits. Ed Venn, State Legislative Chairman for the American Association of Retired Persons (AARP), came forward also in favor of A.B. 592 and Medical Savings Accounts. He explained his reasons for support were somewhat different. One of the difficulties experienced in his growing group of members between the ages of 50 and 65, and still actively involved in the working community, was being left out of the insurance field, and generally, costs skyrocketed for this group of people. If the Medical Savings Account scheme was implemented, not only would the older individual have an amount of money set away, some of this left over could go into a tax-deferred IRA. Additionally, Mr. Venn believed people would have less tendancy to abuse this type of medical system. He indicated the system existed in California, where employers provided medical benefits, but pre-tax dollars could be programmed into an account with the company for expected medical expenses. Additionally, he submitted a copy of the legislation currently in effect in the state of New Mexico (Exhibit Q). David Horten, representing the Committee to Restore the Constitution, distributed a monograph entitled, "Patient Power" (Exhibit R), published by the CATO Institute. This publication developed the theme that third-party pay escalated medical costs, and this inexorably led to high medical costs; which inexorably led to demands for socialized medicine to pay for those high medical costs. A.B. 592, he stated, was a "good bill." With no further testimony, the meeting adjourned at 6:43 p.m. RESPECTFULLY SUBMITTED: _____________________________ Iris Bellinger, Committee Secretary The following after-meeting exhibits are being included for the record: Exhibit S - Message from Lois Olson, Casa Del Sol Mobile Home Park, Las Vegas, in favor of A.B. 528. Exhibit T - Letter to Assemblywoman Sandra Tiffany, dated May 23, 1995, in opposition to A.B. 545. Exhibit U - Petition signed by members of the health care industry in opposition to A.B. 545. Assembly Committee on Commerce May 24, 1995 Page