BILL ANALYSIS
AB 1059
Page 1
ASSEMBLY THIRD READING
AB 1059 (Migden)
As Amended May 23, 1997
Majority vote
INSURANCE 9-4 APPROPRIATIONS 11-7
Ayes: Figueroa, Escutia, Floyd, Ayes: Migden, Baca, Cardenas,
Gallegos, Honda, Keeley, Kuehl, Martinez, Papan,
Papan, Sweeney, Villaraigosa Perata, Shelley, Sweeney,
Thomson, Villaraigosa
Nays: Alby, Aguiar, Baldwin, Nays: Poochigian, Ackerman,
Aguiar,
Leach Bordonaro, Granlund,
Olberg,
Thompson
SUMMARY : Requires health plans that offer benefits to the
dependents of an employee or subscriber to offer those benefits on
the same terms to a domestic partner. Specifically, this bill
requires group health care service contracts to provide the same
benefits to the domestic partner of a subscriber or employee as
they provide to dependents.
FISCAL EFFECT : Unknown. The bill does not require any employer
to provide domestic partner benefits.
COMMENTS : The author introduced this bill to address the paradox
current law poses for unmarried couples. The Unruh Civil Rights
Act, as well as an explicit regulation applicable to the business
of insurance, provide that no Californians will be discriminated
against based on their marital status or sexual orientation. Yet
health plans currently offer benefits to spouses that are not
available to a person's unmarried partner. This paradox is
particularly acute for same-sex couples, who are prohibited from
having their committed and exclusive relationships recognized as
marriages. A court case ( Beaty v. Truck Ins. Exchange (1992) 6
Cal.App.4th 1455) appears to permit this under the Unruh Act.
Elderly couples who form committed and caring relationships share
a similar problem. This bill helps resolve the current conflict
in law with respect to health benefits. Unmarried couples who
meet specific legal requirements will not be denied access to
health benefits for their partner solely because of their sexual
orientation or marital status.
In 1984, the City of Berkeley was the first employer in the
country to offer benefits to the domestic partners of its
employees. In 1993, the Insurance Commissioner convened a task
force to address the problem of unfair insurance discrimination
against unmarried consumers. The report of that task force
pointed out the discrimination that exists, and recommended
recognition of domestic partnerships for insurance purposes. Now
over 500 employers, including cities, states, universities and
private sector businesses (e.g., IBM, Apple Computer, Disney, Bank
of America, Genentech, Montefiori Medical Center, Orrick,
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Herrington & Sutcliffe, Time Warner, the San Francisco 49ers and,
most recently, Chevron) offer such benefits.
But while many health plans offer this coverage to large
employers, they deny the benefit to smaller employers. It is
becoming more clear that this has no economic basis. In a number
of cases, employers and insurers initially included a surcharge on
domestic partnership coverage to address any potential
adverse economic impact. Such surcharges have almost universally
been dropped as experience shows that costs for domestic partners
are nearly identical to (and in some cases less than) costs for
spousal coverage. Employer fears of huge numbers of fraudulent
claims also proved groundless, as reported by the International
Foundation of Employee Benefit Plans.
ARGUMENTS IN SUPPORT : The author argues that more than a decade
of experience with domestic partnership demonstrates that it is
both pro-civil rights and pro-business. Because large businesses
have the leverage to secure this benefit for their employees, it
is mostly smaller businesses that this bill would assist, which is
why the bill is intended to cover the Health Insurance Plan of
California.
The author acknowledges moral differences in the discussion of
domestic partnership, and concerning same-sex couples in
particular, but points out that nearly all religious denominations
are re-examining their position on same-sex couples. An array of
clergy from both the Protestant and Roman Catholic communities
have expressed support of the bill. They note that both the Old
and New Testaments recognize a number of family forms, all
centering around the concept of the household, and that those who
live together in domestic partnerships would be able to meet such
a conception of family. Thus, they argue, it is possible to
support the bill on moral, and specifically, on Biblical grounds.
Moreover, they argue, it is fundamentally just and right that all
persons have access to health insurance.
The Spectrum Institute (SI) in Los Angeles supports the bill on
economic grounds. SI notes that virtually all of the
business-centered fears initially expressed about domestic
partnership have failed to materialize. Surcharges by insurers
and employers were dropped when no adverse claims experience
developed; no unmanageable influx of applicants materialized,
with, on average, only about 1% of employees signing up for such
benefits when offered; to date, thirteen years after introduction
of domestic partner benefits, there have been virtually no claims
of couples fraudulently signing up for benefits; and experience
has shown that the cost of providing domestic partner benefits is
the same as, or, in some cases, less than that of providing
spousal benefits. In addition, SI notes the recent Field Poll
showing that while a majority of Californians still oppose
same-sex marriage, 59% of Californians support domestic partner
benefits such as pensions and health coverage, and 67% approve of
domestic partners receiving non-economic benefits such as hospital
visitation and conservatorship.
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Finally, SI notes that the bill will make it easier for small
businesses to compete for a valuable pool of employees. Over 500
employers, including some of the most prominent in the nation, now
include domestic partner benefits. Smaller employers who want to
compete for employees have a hard time finding insurers who will
offer them the coverage. The San Francisco Chamber of Commerce
explicitly made this point in a press release regarding that
city's contractor law, noting that the availability of insurance
covering domestic partners at competitive rates was "a major
hurdle for companies" wanting to purchase the coverage.
Lobby for Individual Freedom and Equality (LIFE) urges that,
because of the inability to enter a recognized marriage under
state law, committed same-sex couples in particular have long had
to struggle within the legal system to protect one another. This
not only creates hardships for both partners, but exacts a cost to
the state. Where only one partner works or has a job that
provides health coverage, the societal expectation is that, by
virtue of their commitment to one another, both partners will be
covered for health costs.
But by limiting such coverage only to legally defined spouses, the
state ends up providing health care for the non-working partner in
such relationships. Many, if not most of such couples view
themselves as spouses, and hold themselves out to the world as
partnered. The state's continued refusal to recognize such
relationships, according to LIFE, is thus poor public policy that
this bill can correct.
ARGUMENTS IN OPPOSITION : The Committee on Moral Concerns makes
five points in opposition. First, homosexual couples are simply
friends, and should not be viewed as dependent on one another
irrespective of their own assessment of the importance, intimacy
and permanence of their relationship. Second, heterosexual
couples who are unwilling to commit to a marital relationship
should not be given taxpayer recognition. Third, roommates might
sign up for these benefits, and the constitutional right to
privacy would prevent government from determining whether their
relationship was more than just casual. Fourth, the cost to
employers of domestic partnership benefits would result in lower
wages, higher prices, elimination of jobs, and reduction in
insurance coverage for other workers. Fifth, the historical
family arrangement works best for society.
Analysis prepared by : David Link / ains / (916) 445-9160
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