MINUTES OF THE ASSEMBLY COMMITTEE ON COMMERCE Sixty-eighth Session May 29, 1995 The Committee on Commerce was called to order at 3:40 p.m., on Monday, May 29, 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 Ms. Barbara E. Buckley Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Lynn Hettrick Mr. David E. Humke Mr. Michael A. (Mike) Schneider COMMITTEE MEMBERS EXCUSED: Mr. Morse Arberry, Jr. GUEST LEGISLATORS PRESENT: Assemblyman Mark Manendo, Assembly District 18 Assemblyman Bill Harrington, Assembly District 2 STAFF MEMBERS PRESENT: Paul Mouritsen, Research Analyst OTHERS PRESENT: Jim Wadhams, Insurance Industry, Nevada Dental Association Marsha Berkbigler, Nevada State Medical Association Guy Gansert, M.D., Nevada Chapter of the American College of Emergency Physicians Gary Gansert, M.D., Emergency Room Physician Joe Hollen, M.D., Emergency Room Physician Sam Shields, M.D., Emergency Room Physician Bob Perry, Nevada Trial Lawyers Sharon Weaver, Division of Insurance Joe Guild, Nevada Mobile Home Park Owners' Association Charlie Joerg, Nevada Manufactured Housing Association William Richards, Mobile Home Park Owner James Thorpe, Mobile Home Park Owner Donald Morse, Manufactured Housing Division Fred Hillerby, Hospital Health Plan and Coordinated Care Options Following roll call, Chairman Tiffany announced she would like for the committee to take action on A.B. 399. ASSEMBLY BILL 399 - Revises provisions relating to state contractors' board. Ms. Giunchigliani submitted amendments to the bill (Exhibit C). Referring to the Exhibit, page 2, item "3," Mr. Allard questioned whether the language "allege," was strong enough. Ms. Giunchigliani explained this was new language added to A.B. 399, and during the public hearing no one had raised a question regarding this point. Mr. Allard also questioned the language dealing with the Attorney General. Before reviewing all the amendments shown on the Exhibit, Chairman Tiffany asked Ms. Giunchigliani if she had met with the State Contractors' Board, and whether the amendments reflected feedback from interested parties. Ms. Giunchigliani answered she had met with members of the State Contractors' Board, however, these individuals had not signed off on the proposed amendments even though they had had these in hand for a week. Ms. Giunchigliani indicated a decision had been made to amend the bill to simply deal with the unlicensed contractors and not licensed contractors. Thus, much of the language had been deleted. All the "shalls" had been removed and replaced with "may" at the Board's request. The Chairman suggested Ms. Giunchigliani review the proposed amendments, and action would be held until the following meeting. In addition to changing the word "shall" to "may," Ms. Giunchigliani indicated throughout the bill the Attorney General was given the first line of prosecution in the cases of unlicensed contractors. Chairman Tiffany questioned the intent of the Contractors' Board in inserting the Attorney General as the first line of prosecution. Ms. Giunchigliani explained they had finally decided this would assist them in prosecuting this type of case. The Assistant Attorney General, Brooke Nielsen, had attended the subcommittee meetings on this bill, and it had been decided a special unit would not be created within the Attorney General's Office, however, a person would be named to handle the complaints in that narrow area. Also, there would be a potential cost allocation for this service. However, because the administrative fines had been imposed, this could potentially pay for this service. Mr. Allard suggested the language dealing with the Attorney General in subsection 2 state: "The Attorney General may, upon the request of the Contractors' Board ...", and this addition was agreeable to Ms. Giunchigliani. ASSEMBLY BILL 439 - Revises various provisions relating to mobile home parks. Mr. Allard reported he and Ms. Buckley had come to an agreement with the Director of the Manufactured Housing Division, Renee Diamond, who would be submitting amendments. Chairman Tiffany indicated action would be held until the following meeting. ASSEMBLY BILL 462 - Requires garages that repair motor vehicles to register with consumer affairs division of the department of business and industry. Chairman Tiffany indicated there was agreement reached with Assemblywoman Vonne Chowning on amendments to this bill. Also, when the Consumer Affairs budget was closed in the Ways and Means Committee, it would have to be made certain there was no conflict. This bill, she said, would be heard during the following meeting. ASSEMBLY BILL 472 - Requires instruction for original real estate salesman's license to include subject of disclosure of information in real estate transactions. Chairman Tiffany reported this bill, dealing with continuing education for real estate sales people, dealt with disclosure requirements. ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 472, WITH THE AMENDMENT TO STATE THE EFFECTIVE DATE AS JANUARY 1996. Referring to page 1, lines 9 through 11, there had been a request to include the language "broker or broker salesman," and on line 17, Mr. Spitler noted there had been a request to change the 15 hours to 18 hours. Also, on page 1, line 18, there was a request to add the language, "or three semester hours." Mr. Hettrick noted on page 1, line 11, there was a suggestion to change the language "methods of obtaining the required information." The language he had noted would change this to, "the seller may use for obtaining the required information." Ms. Giunchigliani reformed the amendment proposed in her motion: ASSEMBLYMAN GIUNCHIGLIANI MOVED TO DELETE THE WORD "OF" ON PAGE 1, LINE 11, AND INSERT "THE SELLER MAY USE FOR"; ON LINE 17 DELETE 15 AND INSERT 18 AND ADD "BROKER AND BROKER SALESMAN;" AND TO AMEND THE EFFECTIVE DATE TO JANUARY 1, 1996. ASSEMBLYMAN HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT. (ASSEMBLYMEN ARBERRY, BUCKLEY, PERKINS AND HUMKE WERE ABSENT FOR THE VOTE.) ASSEMBLY BILL 497 - Provides for licensure and regulation of professional counselors. Mr. Schneider said he would be ready to report on this bill during the next meeting of the committee. ASSEMBLY BILL 545 - Requires state board of nursing to issue licenses to practice nursing to certain applicants without examination. Mr. Allard reported he was trying to meet with Jim Wadhams to discuss some possible amendments to this bill, and he would be ready to offer testimony during the next committee hearing. ASSEMBLY BILL 556 - Revises provisions governing employment of unarmed security guards by licensed private patrolmen. Ms. Buckley asked if the sponsor of the bill, the city of Las Vegas, planned to testify. Chairman Tiffany indicated she had received no word from the representatives. Ms. Buckley said she had been very unimpressed with the need for the bill, and, in fact, did not believe it was a good bill. However, she had read some newspaper articles from Las Vegas which indicated this was an effort to secure jobs for ex-felons. She did not think the appropriate field for these jobs was as a security guard where a third party did not know they were hiring an ex-felon. Alternatively, if it was a relationship in which an employer directly wished to give someone a second chance, this was a good thing. As the bill stood, Ms. Buckley stated she could not support it, but if the city of Las Vegas wanted to use it as a vehicle to aid their efforts in placing ex-felons directly with an employer, she could support such legislation. She wondered what the sponsor really intend. ASSEMBLYMAN BROWER MOVED TO INDEFINITELY POSTPONE A.B. 556. ASSEMBLYMAN HETTRICK SECONDED THE MOTION. THE MOTION CARRIED. (ASSEMBLYMAN ARBERRY WAS ABSENT FOR THE VOTE, ASSEMBLYMAN BUCKLEY VOTED NO, AND ALL OTHERS VOTED YES.) SENATE BILL 69 - Makes various changes to provisions governing licensing and regulation of dentists and dental hygienists. Mr. Spitler noted on page 3, section 5, on page 19, and again on page 47, the scores had been lowered from 80 to 75, and he indicated he could only support this bill because he had learned that this was consistent with what other states were doing. Page 1, lines 12 through 15, also appeared to be an effort to bring it into compliance. Mr. Spitler said it was his understanding this type of language was being applied to other Boards as well, so the public member and all members actually voted on those specific issues. In order to provide consistent language, he said he would support the bill. Ms. Brower was generally not in favor of the bill. She especially did not favor lowering the testing standards nor the health standards, as seen on page 3, line 19 and line 47. Ms. Giunchigliani opined if the language was taken as a whole, it would not be seen to lowering the standards, but only emphasized what the minimum standard would be. Representing the Nevada Dental Association, Jim Wadhams told the committee this was a bill offered by the State Board of Dental Examiners, and Mr. Spitler had correctly stated the premise. What had been found in analysis was that all surrounding states set the score at 75, and making that change would make the state consistent. Mr. Humke was not persuaded Nevada needed to follow the example of other states. ASSEMBLYMAN HUMKE MOVED TO AMEND BY MAKING THE TWO CHANGES AT PAGE 3, LINES 19 AND 49; TO DELETE THE NUMBER 75, AND REPLACE THE NUMBER 80, AND DO PASS S.B. 69. ASSEMBLYMAN BROWER SECONDED THE MOTION. Ms. Giunchigliani reiterated this was not necessarily lowering the standard, and she thought it lent itself favorably to reciprocity. She said she would not be supporting the motion. THE MOTION FAILED. (ASSEMBLYMEN ARBERRY AND PERKINS WERE ABSENT FOR THE VOTE. ASSEMBLYMEN BROWER, BUCKLEY, HUMKE AND TIFFANY VOTED YES, ALL OTHERS VOTED NO.) ******************** ASSEMBLYMAN HETTRICK MOVED TO DO PASS S.B. 69. ASSEMBLYMAN ALLARD SECONDED THE MOTION. THE MOTION CARRIED. (ASSEMBLYMEN ARBERRY AND PERKINS WERE ABSENT FOR THE VOTE. ASSEMBLYMEN BROWER AND HUMKE VOTED NO, ALL OTHERS VOTED YES.) SENATE BILL 332 - Revises provisions relating to unfair practices of motor vehicle manufacturers, distributors, factory branches and their representatives. Chairman Tiffany noted this bill should have gone to the Committee on Transportation. ASSEMBLYWOMAN GIUNCHIGLIANI MOVED NO RECOMMENDATION, AND TO REREFER TO THE COMMITTEE ON TRANSPORTATION. ASSEMBLYMAN SPITLER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT. (ASSEMBLYMEN ARBERRY AND PERKINS WERE ABSENT FOR THE VOTE.) ASSEMBLY BILL 593 - Provides for payment of providers of health care or services in medical emergencies. Representing the Nevada State Medical Association, Marsha Berkbigler told the committee this bill had been requested by the State Medical Association in conjunction with the American College of Emergency Physicians - Nevada Division. Basically, the language on page 1, line 15, provided that when an individual was injured or had a sudden onset of illness which necessitated him going to the emergency room, the "Prudent Layman Doctrine" should be in force, and that the insurance company carrying that individual, at that time, should be responsible for paying the bill. This type of legislation had passed in several other states, Ms. Berkbigler added. Ms. Berkbigler continued with a section-by-section review of the bill. In efforts to bring the high cost of medical treatment under control, she told the committee the State Medical Association had legislation being proposed which would be carried forward under the title of Health Access Nevada, to be presented in the Senate the next week. Ms. Berkbigler and Chairman Tiffany discussed prior authorization, and the issue of whether an emergency room accepted insurance company authorization or doctor authorization. After some discussion, Ms. Berkbigler said if it was Ms. Tiffany's wish to see the language state rather than the emergency room's cost, the cost that was approved by the PPO, she would either ask the committee to decide, or ask the physicians testifying for their comments. The Chairman believed if this was an issue of specific insurance companies not paying, it was a matter to be taken up with the Insurance Commissioner. Ms. Giunchigliani questioned whether the committee really needed to address "Managed Care." Ms. Berkbigler said it was her understanding the way the bill was drafted it would cover any insurance policy written in the state. Ms. Giunchigliani wanted to see this clarified. Regarding Section 5, Ms. Giunchigliani believed the language read like a standard utilization review. There was a need to clearly define what was truly an emergency, and when the emergency became a stabilized, but hospitalized condition. Coming forward to represent the Nevada Chapter of the American College of Emergency Physicians, and to speak in support of the bill, Dr. Guy Gansert, Medical Director of the Emergency Department at Washoe Medical Center, emphasized the main aim of the bill was to protect the patient. He read his testimony into the record, and offered a historical record which led to the request for the bill. Retrospective denial of benefits. Dr. Gansert offered a number of real and hypothetical examples which illustrated the need for provisions in the bill. He stated that as managed care penetrated the market the problem would only get worse. A.B. 593 would give the Legislature the opportunity to quarantine the situation before it became an epidemic. Following Dr. Guy Gansert, his brother Dr. Gary Gansert, an emergency room physician for 20 years at Washoe Medical Center and the Medical Director at Northern Nevada Hospital, the former Sparks Family Hospital, cited several anecdotal stories which highlighted the need for the type of legislation offered by the bill. Dr. Joe Hollen, also an emergency physician for 16 years, working at Washoe Medical Center and Northern Nevada Medical Center, echoed the previous testimony and offered his own examples of need for the bill. Dr. Sam Shields, emergency physician, stated that managed care and emergency medicine did not fit well together. A general practitioner who had a managed care program had the luxury of calling a specialist, getting approvals, etc., and this worked very well, but at 2:00 a.m. some morning it did not work at all well. This left the emergency room physician in a very difficult position. It was impossible to get a prior approval during the middle of the night, and presented a different environment from the usual managed care experience. The Director at St. Mary's Hospital, Dr. Michaelson, stated he was well versed in the issue of billing, and he particularly understood the role of managed care in the emergency setting. He offered several anecdotal stories, saying that the problems being cited were not universal with all Health Management Organizations (HMO), and some, such as St. Mary's, Health Plan of Nevada, worked very well. This law would not offend the HMO that put health care for the patient first, he declared. Ms. Brower asked who usually made the call for prior authorization. Dr. Michaelson said if the system was working properly and the patient had a minor ailment, the patient called their own doctor first. If this failed and the patient showed up in the emergency room, and were truly emergent, the staff in the emergency room saw them first and no authorization was received prior to triage. If the condition was non-emergent then either the physician or the insurance company was called first. The four areas of problems seen by Ms. Buckley were: 1. The need for prior authorization for hospital care from an insurance company. 2. When the person presenting the emergency need had coverage with another hospital and the issue of that patient checking out to go to another hospital. 3. Trying to get prior authorization from a primary care physician to see a specialist for an emergency. 4. Non-retroactive emergency decision wherein the individual stabilized to a non- emergency condition, and the cost of treatment was therefore denied, which moved the case from a non-emergent condition. Dr. Michaelson said the issue on authorization was that they needed authorization in a timely fashion. There was an obligation to see a patient in a timely fashion -- 20 to 30 minutes. Then the conflict was when the emergency room doctor could not see a complaint that they would normally see, and this put them in conflict with federal COBRA regulations. Referring to page 2, line 10, Mr. Hettrick questioned whether this language should say "physician," or whether this could be a nurse or some other individual. Dr. Shields interjected it needed to be a physician, because resolution was needed on a medical level and only a physician would offer an exchange of dialogue which would assure the emergency room physician the individual had the same knowledge of medicine. Dr. Michaelson believed this language related to "utilization review" and "retroactive denial." There followed a long discussion in which Chairman Tiffany spoke on capitation, and prior authorization. Referring to Section 4, Ms. Giunchigliani noted the language appeared to achieve the goal stated by the proponents of the bill. She was only concerned with the quality of care, and that the patient would come first. Although she allowed there might be some clarification needed, she believed the proponents were close in assuring that the quality of care for the patient was, indeed, covered. Mr. Hettrick again drew attention to page 1, and asked if there had been any problems cited with the State Industrial Insurance System (SIIS). Initially, Marsha Berkbigler answered, it was their understanding the way the bill was written it did include SIIS. After discussion with other representatives of the insurance industry, she said she had learned that, in fact, SIIS was not included in the bill, although this had been their intent to include SIIS. Speaking in opposition, and representing Nevada Insurance, Bob Barrengo reviewed the sections of the bill which would cause problems. He did not believe the problems cited by the doctors would be addressed by provisions of the bill, but he insisted there were adequate avenues to address these problems through the Department of Insurance, and through dispute resolution with the HMOs. In response to Ms. Brower's question regarding how many HMOs there were in the state, Mr. Barrengo told her there were seven licensed HMOs, and he represented Humana. Marie Soldo came forward to speak for the Association which represented all the HMOs, and Ms. Brower asked her if all the HMOs were as irresponsible in authorizing patient treatment as it appeared to be from the testimony. Ms. Soldo said she merely wanted to make it clear that the benefit plans in Health Maintenance Organizations covered all medically necessary care and emergencies. There was no prior authorization required for emergency medical care, but there were requirements that once the patient was stabilized they had to contact the primary care physician. Ms. Soldo added that she did not believe the physicians were aiming their remarks mainly at HMOs. Also, only 15 percent of the Nevada population belonged HMOs, and further, self-funded plans had managed care programs, as well, and her Association had no authority over these organizations. It was important, Ms. Soldo maintained, to not view the testimony as tarnishing HMOs, as they made great efforts to accommodate and communicate within the industry. She believed if the Department of Insurance was questioned, they would confirm the number of complaints on emergency care had reduced dramatically over the last several years, due to efforts being made to educate and communicate. Ms. Buckley asked if the opponents of the bill recognized there were occurrences as described by the physician proponents. Also she asked Mr. Barrengo if he objected to the use of a "prudent layman" standard instead of a "physician standard," or whether he objected to the bill as a whole. In response, Ms. Soldo said it was her interpretation that this was a mandated benefits bill. She recognized the frustration expressed by the doctors, and acknowledged this was probably nationwide, where those involved in the industry were well aware of their responsibility to cover emergency care, and did not want to be in a position where they were denying such care. On the other hand, those insured needed to be made cognizant of how to access emergency care in the proper way. The bill took it to an extreme. With no further testimony on A.B. 593, Chairman Tiffany opened the hearing on A.B. 596. ASSEMBLY BILL 596 - Revises provisions governing coordination of benefits under certain group health insurance policies. Bob Perry, sole practice attorney and member of the Nevada Trial Lawyers (NTL) came forward in support of the bill which dealt with the situation in which a consumer purchased automobile medical coverage in case of an accident, and who was also covered by a health insurance plan. In some cases, if the health insurance company found there were medical payments available under an automobile policy, they would write provisions in the health policy which said the individual had to draw on the automobile insurance first. Subsequently, with a "right of subrogation" clause written into the policy, the health insurer was removed from any type of liability. Mr. Perry said if the automobile medical insurance did not have to be used first, the individual could go to the health insurance first, and then use the auto medical to pay the difference, the deductible, or the difference between the 80 percent and 100 percent of the bills. After some discussion, Mr. Hettrick said he believed the only thing to be resolved with this bill was to determine who paid first. Beyond this, he believed they would be discussing a significant rise in the price of insurance if a deductible was taken out of the quotient. Ms. Giunchigliani said she really had no problem with the bill, but did believe the bill should be reworded to define who paid first. The whole purpose of overinsuring was to try not to be out-of-pocket. Testifying in opposition to the bill, Jim Wadhams, representing the American Insurance Association, the Nevada Independent Insurance Agents' Association, Nevada Association of Health Underwriters and the Nevada Association of Life Underwriters, said after hearing Mr. Perry's testimony he had decided to change the direction of his opposition. If the purpose of the bill was to codify a Supreme Court case saying there was no subrogation against medical payments insurance in the auto insurance policy, this would be acceptable, but the bill did not say that. Some of the committee questions had identified certain bill drafting problems with the language, i.e., "medical payments under liability insurance." Mr. Wadhams discussed the legal issues regarding insurance policies, and added that the Supreme Court had said there was no set off against the first-party medical pay. The bill, as written, reversed the public policy, and would drive up the cost of insurance -- a cost which was always passed on to the consumer. Sharon Weaver, with the Insurance Commissioner's Office, indicated her agreement with Mr. Wadhams' testimony, and said the Insurance Commissioner's position was neutral on the bill. Ms. Weaver indicated the bill appeared to need clarification, and currently, insurers and HMOs were allowed to subrogate to the negligent third party, which was the tortfeasor. This was not only acceptable, Ms. Weaver said, it was aggressively enforced. The insurers and the HMOs did go ahead and pay for the medical expenses first, and then they sought a lien against recovery, but only to the extent of the medical expenses they had paid out, and this was only when there was a negligent third party. Maxwell vs. Allstate, the Nevada Supreme Court case which held that in the first party situation, the insured was not only entitled to their money from the insurance company or from an HMO, but were also entitled to keep their auto med/pay. The court held that the insured paid a premium and was entitled to benefits. Mr. Hettrick ascertained they were entitled to the payment with deductible in the case of those that had deductible. Ms. Weaver said, "yes," that's correct. With no further testimony, Chairman Tiffany asked for testimony on A.B. 599. ASSEMBLY BILL 599 - Revises provisions relating to placement of mobile homes and other structures on mobile home lots. Assemblyman Mark Manendo, Assembly District 18, told the committee there were basically two reasons for him bringing the bill before the committee. In situations of double wide mobile homes, there were instances in which these were being placed on single wide lots, as well as instances of triple wide homes being placed on doublewide lots. He opined this could possibly be a violation of the zoning laws. He said several of his constituents would like to see this placed into NRS 118(b). Mr. Manendo entered a letter from Jeannie Deeg, President of the Nevada Association of Manufactured Home Owners (Exhibit D), and read it into the record. In response to Ms. Giunchigliani's question, Mr. Manendo admitted he had not been able to research each county's regulations, but in Clark County it was included in Title 27 regulations, where it stated the amount of setback necessary. What was obvious, however, was that the rules were not being enforced. Speaking in opposition, Joseph Guild, representing the Nevada Mobile Home Park Owners' Association, said the bill would not create uniformity because different jurisdictions had different requirements for mobile home placement and Title 27, in Clark County, did have a setback requirement similar to the one set forth in the bill at page 1, lines 5 and 6. Title 27 required that no mobile home should be set closer than 5 feet from any lot line, however, the allowable awning setback requirement was different in the bill than it was in Title 27. Mr. Guild discussed the requirements imposed in Carson City, which were different than those in Clark County. If the goal was uniformity, the bill would conflict with setback requirements in some other jurisdictions. Focusing on this portion of the argument, Mr. Guild said Ms. Deeg, in her Exhibit D, had not been specific in her opinion. Additionally, NRS 118(b) was a landlord/tenant law and there were other statues dealing with safety of mobile homes, size of lots, etc. Basically, in practical terms, Mr. Guild said there was the probability the onus would be placed on the mobile home park owner rather than the tenant who added storage sheds, or built an addition to his mobile home. The following mobile home park owners testified in opposition to A.B. 599: - Jim Thorpe, owner of the Hillside Mobile Home Park in Carson City for 33 years. - Williams Richards. Involved in the ownership of three small mobile home parks in Carson City. Believed it imposed an unfair condition on his park tenants and any future tenants, and continued with an analysis of the flaws in the language. Donald Morse, an investigator with the Manufactured Housing Division of the Department of Business and Industry, told the committee he was testifying in behalf of Renee Diamond, the Division Administrator. Mr. Morse submitted a copy of his written testimony (Exhibit E) and read his remarks into the record. Ms. Giunchigliani questioned what was needed for the placement of a mobile home. Mr. Morse said in all the placements he was familiar with, the mobile home owner had to take in a lot plan of the mobile home lot they were going to live on and show where the mobile home was going to be placed, the spaces around it, and any other accessories they intended to install, before they were issued a permit to do it. Ms. Giunchigliani suggested perhaps those requesting the bill should check to see if, perhaps, the county authorities should be the entity to enforce these regulations. ASSEMBLY BILL 583 - Provides for acquisition, retention and transfer of health insurance. Assemblyman Bill Harrington, Assembly District 2, submitted the "Reasons to Vote for A.B. 583," (Exhibit F), read the text into the record, and continued with a review of the various sections. He pointed out to the committee that the heart of the bill were Sections 4, 5 and 6. Dr. Harrington also stated if people did not want the federal government to be intervening in their lives, they needed to take care of problems such as those posed by the bill, at the state level without undo impact on health insurance. Referring to Section 5 and Section 6, these were covered in A.B. 299, Chairman Tiffany pointed out. Also, Section 4 dealing with guaranteed issuance, would certainly be a worthy goal, but it would be very cost prohibitive. The option offered by HMOs regarding preexisting conditions, relieved this kind of situation. She asked if Dr. Harrington if he had had any conversations with people in the industry regarding this issue. In response he said what caused prohibitive costs was because when people became ill they went after insurance selectively, which affected the pool risk. By having a ten-year limit written into the bill, it would alleviate the problematic issue of preexisting condition. Mr. Hettrick noted that nothing in the language required that the insurance be issued at the same rate. It stated an application could not be refused, but there was no mention of the rate. He wondered if there was a way to write into the bill a provision in which the insured could pay the difference in the existing rates. Dr. Harrington acknowledged Mr. Hettrick's point, but said he would not like to see the rate increase significantly. The whole issue of insurance was "shared risk." Many people paid in without ever using it, in order to help those who did have to use the insurance. The alternative of not insuring this segment of the population was that they paid nothing into the system, and when it was necessary, went into a public hospital where it finally cost everyone. Fred Hillerby, representing Hospital Health Plan and Coordinated Care Options, commended Dr. Harrington's aim, but there were technical issues presented on page 1, line 8, "... every employer who provides health benefits ...". While the concept raised with this language was commendable, the question remained, how do we make public policy to deal with "uninsurable" people and spread it over the widest possible base. Mr. Hillerby agreed with Chairman Tiffany that most issues presented in this bill were addressed in A.B. 299. Marie Soldo, Sierra Health Services, remarked that when the HMOs accepted a group, they accepted everyone in the group with no preexisting and congenital conditions. Indeed, she said, ways had to be found to pay for some of the costs associated with preexisting and congenital conditions. With no further testimony, the hearing was closed on A.B. 583 and the meeting adjourned at 6:30 p.m. RESPECTFULLY SUBMITTED: _____________________________ Iris Bellinger, Committee Secretary Assembly Committee on Commerce May 29, 1995 Page