MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session February 2, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Thursday, February 2, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Randolph J. Townsend, Chairman Senator Ann O'Connell, Vice Chairman Senator Kathy M. Augustine Senator Raymond C. Shaffer Senator John B. Regan Senator Joseph M. Neal, Jr. COMMITTEE MEMBERS ABSENT: Senator Sue Lowden (Excused) STAFF MEMBERS PRESENT: DeLynn Gillentine, Committee Secretary Beverly Willis, Committee Secretary Scott Young, Senior Research Analyst OTHERS PRESENT: Samuel P. McMullen, Lobbyist, Las Vegas Chamber of Commerce Eric S. Cooper, Lobbyist, Las Vegas Chamber of Commerce Joe Cain, Lobbyist, The McMullen Strategic Group Frank R. Guisti, Jr., Lobbyist, Nevada Health and Life Underwriters Assoc. Jerry Ayers, Managed Care Consultants, Inc. Joe Lawrence, Managed Care Consultants, Inc. Marty Bibb, Lobbyist, Retired Public Employees Association Senator Townsend called the meeting to order. The first item of business was a presentation by Samuel P. McMullen, Lobbyist, Las Vegas Chamber of Commerce. He introduced himself, Eric Cooper, Lobbyist, and Joe Cain, Lobbyist and Issues Analyst at his firm. He introduced Exhibit C, Exhibit D and Exhibit E. (Exhibit E original is on file in the Research Library.) Mr. McMullen commenced with an overview of Exhibit E and highlights from Exhibit C. Senator Townsend asked for clarification of the number of people who responded. Mr. McMullen stated the number of responses for this data was 332. Senator Shaffer stated, ". . . in looking at page 3 of Exhibit E, second bullet, is that the 97 reversed of 57 percent? Can we correlate these two facts?" Mr. McMullen replied, ". . . it probably relates more to the 75 percent number out of the 75 percent who provide coverage . . . 255 companies provide dependant coverage." Mr. McMullen continued the presentation of Exhibit C. Senator Augustine questioned Mr. McMullen on a presentation made by the insurance commissioner a day earlier on a "bare-bones policy." She wondered if the Las Vegas Chamber of Commerce provided information to the small businesses to promote its use. She wondered if the businesses were even aware of this option and its availability to them. Mr. McMullen did not know if this information was provided to the membership. Senator Augustine suggested its inclusion in the future as she was astonished to find very few companies had taken advantage of it. Mr. McMullen presented Exhibit E and discussed a comprehensive phone poll, research question and survey service provided by the chamber of commerce. Senator O'Connell asked what the time frame would be to use the chamber of commerce's comprehensive phone poll and survey. Mr. McMullen informed her that "Topline Data" could be received in a couple of days. The analysis might require assistance of professionals to ensure statistical reliability. Start to finish the poll would be completed between 1 to 3 weeks. Senator Townsend asked about page 5 of Exhibit E. He related his wish for clarification on the statistic related to cafeteria plans and their pretax or post tax basis. Mr. McMullen replied that the employee can allocate benefits to whatever choices their benefit structure allows to enhance his personal needs. Senator Regan added, "From an employee standpoint . . . the deductions are done from a gross standpoint, pretax dollars . . ." Senator Townsend questioned a statistic on page 5, Exhibit E. He explored the calculation of 8.8 for an average percentage of businesses total payroll cost of health insurance. Was this an average of those who do provide health insurance or an average at all? Mr. McMullen replied, "I believe, that you have to relate these two questions to that 75 percent limitation. It is actually those that actually provide health insurance where the cafeteria plan would allow that as an option or that the cost of the premium would be taken out . . . ." Senator Townsend asked, "Using that 8.8 figure. Is that high or low on a national average?" Mr. McMullen answered, ". . . I do not know . . ." Senator Townsend stated, "It would be interesting to see if those persons . . . that have a contract with the culinary or some of our larger employers, what percentage of their total cost of doing business, if that is high or low to national." Mr. McMullen and Senator Townsend discussed ways of improving the data from this survey by analyzing the annual report from the gaming control board. Mr. McMullen suggested the survey (Exhibit E) of small businesses furnished results in which, unfortunately, a quarter of the respondents do not think they can provide health care and must consider the health of their business as their first priority. Senator Townsend stated the possibility that cost may not be the only barrier for employers wanting to provide health care. He surmised there could be more than just one barrier for employers and suggested the committee devise questions that could point out other problem areas. He thought the biggest charge to the Senate Committee on Commerce and Labor this year was to discover which barriers are stopping employers from providing health care to their employees. Mr. McMullen repeated his offer to provide service for another poll and the importance of qualifying the statistics. Senator Townsend agreed and suggested the committee should come up with some questions for a poll of the chamber of commerce members. Mr. McMullen called attention to their ability to fax all of their members within a short period of time. He noted their attempt to broaden their polling list and contact other businesses and associations. Senator Regan asked if the southern Nevada home builders, Ray Bacon and his manufacturer's association in northern Nevada, could be included in the survey to ensure "a total spectrum of not just the business community." He suggested contacting people for the poll through Irene Porter, Dallas Coonrod and Ray Bacon. Mr. McMullen stressed the importance of a consistent questionnaire. He discussed the feasibility of polling other associations or having them poll their own membership and send the results to the chamber of commerce. Senator Townsend stated he thought it was important to know by category who was providing health care and who was not. He asserted that based on that information, the committee could find out why certain industries provide health care and some do not. Mr. McMullen stated for the record, "For maximum return of information, we need to do it with enough protection of confidentiality so that they will talk." Senator O'Connell mentioned she would be interested to find out if employers had relief from the State Industrial Insurance System, (SIIS) would they be more likely to self-insure? Senator Townsend acknowledged: That brings up an interesting point that we have debated in this committee for years; and that is someone who is sensitive to that premium increase in SIIS. How many of those people are not really put on a workman's compensation claim where they belong, but are shifted over to their health care policy because they are salaried employees and will be paid weekly anyway. So the compensation is not an issue and therefore it is just a matter of health care and the employer just reaches in his pocket for the 20 percent of deductible. . . you have so many small employers that do not have health care, cannot afford health care, cannot get health care . . . that it becomes a workman's compensation claim because they . . . let it go too long . . . . In response to Senator Townsend's statement, Mr. McMullen asserted: . . .I think . . . the point would be to survey barriers and also incentives . . . I think the natural inclination of most people is to try to provide that type of benefit if it was within their business means to do it and make sure that there is a way to do that or satisfy that. I do not think there is very many . . . who do not want to or have no inclination to provide health care. It is just a way of finding an incentive or a way of allowing it. Senator O'Connell added: As a small business owner, I can tell you that it is a critical issue because . . . we cannot provide it, and they are looking for it, . . . that is one of the major things that a person who is seeking a job is looking for are those benefits. It is very costly to a small employer because you keep training people over and over, which is very time consuming, and as soon as you have a good employee, nine chances out of ten they are going to get a better job . . .They are looking because of the benefits. The health benefit is the number one issue, so I can tell you . . . that you want to provide those benefits so you can hang on to your good employees. Senator Neal queried Mr. McMullen in regard to page 9 and page 14 in the chamber of commerce survey (Exhibit E). He asked questions relating to the response to the Clinton Health Care questions on the survey and some clarification. Senator Neal asked if the question and response listed on page 7 of the questionnaire was to be considered nationally or on a state level. Mr. McMullen advised it was considered on a statewide basis. Senator Neal asked the meaning of the words "tax free" when used in the context of question number 2 on page 8. Mr. McMullen answered, in this case "tax free" meant no taxes would be used to fund health care. In addition, Senator Neal commented on the "general misunderstanding on the part of most businesses" about what health care proposals were available. Senator Neal noted, "I see that they were saying that the purchase through a health alliance was not important, but the health alliance was used as a cost containment measure to reduce the cost of insurance." Senator Townsend suggested the chamber of commerce list five or six principles from proposals the committee heard yesterday when polling the members; additionally, ask them how important the principles are in regard to the decision to bring health care to their employees. This information would help provide answers to the question of why some employers do not provide health care. Senator Townsend suggested the chamber of commerce return to those people who did respond to the questionnaire (Exhibit E) and do not have health care. Mr. McMullen stated that they will try to survey those mentioned by Senator Townsend. Mr. McMullen stated they would try to complete the survey quickly. Senator Neal asked about the names listed on the letterhead of Exhibit C and the Steering Committee Member list (Exhibit D). Mr. McMullen explained that the letterhead was from the Las Vegas Chamber of Commerce Government Affairs Committee and the Steering Committee List (Exhibit D) was that part of the active membership that met to discuss the issues on health care. In reference to health care rationing mentioned on the second page of Exhibit C, Senator Neal asked, "What type of plan would they have and whether or not that plan would have a cost containment measure as a part of it?" According to Mr. McMullen it would have to include a cost containment measure. Senator Neal replied, "One of their suggestions that they made is to allow the free market forces to dictate health care costs . . . we know it does not work, when a person is sick, a person is injured, . . . you go to a doctor and try to seek medical treatment . . . you do not have a choice." Mr. McMullen stated the message the chamber is trying to send is "opposed to just totally cramping this system by government controls and government impositions that there really is a place for competition and trying to enhance the competitive aspects that would have some material impact on cost and cost effectiveness of the system." Senator Townsend asked if there were any other questions and requested Mr. McMullen to respond to the committee with information on the discussed, additional topics as soon as possible. Mr. McMullen said he would return between Monday and Wednesday with answers. Senator Townsend introduced Frank Guisti, Jr., Lobbyist, Legislative Chairman, State of Nevada Life and Health Underwriters Association. He wanted to respond to Tuesday's testimony on Health Access Nevada. Mr. Guisti presented his testimony (Exhibit F). Senator Neal questioned Mr. Guisti about which mandated benefits are eliminated when a company goes self-insured. Mr. Guisti explained, the coverage for the treatment of drug and alcohol abuse is one of the most common ones that is eliminated. Senator Neal replied, "I thought we had made that a requirement." Mr. Guisti stated, "Again, senator that is a requirement for fully insured contracts, but the Employment Retirement Income Security Act (ERISA) preemption says that self funded plans do not have to provide state mandated benefits. Yesterday the folks from Blue Cross and Blue Shield gave you a grid that shows we have some 24 to 26 mandated benefits in the state of Nevada, each one of those adds to the cost of group insurance contract." Senator Townsend added: I would hope that your group and medical society could clear up these things . . . I do have one question, one of the things that is a common theme that is becoming a real irritant for the public and certainly therefore this committee is that physicians are having to become small business persons themselves because of the amount of paperwork . . . but when you add the private health insurance industry to it, it is an overwhelming amount of paperwork. As a result, is there any effort being made to find a legitimate single piece of paper that everyone can use whether it is for private health insurance and in your case all the companies? . . . is there a discussion about this on the national level? Mr. Guisti advised Senator Townsend he would contact the Health Insurance Association to acquire statistics on his question, if it is available. Senator Townsend and Mr. Guisti discussed the benefits of the Negotiated Discount Contract. Mr. Guisti wanted to make a comment on today's testimony regarding Exhibit E. He stated depending on how the 8.8 percent of cost was calculated, it could include the fact that most small businesses do not pay 100 percent of employee premium and this could make the figure low. Senator Neal asked Mr. Guisti what goes into the calculation of a premium and increases in a premium? Mr. Guisti shared a renewal calculation formula with Senator Neal. There being no further business, the meeting was adjourned at 10:15 a.m. RESPECTFULLY SUBMITTED: DeLynn Gillentine, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor February 2, 1995 Page