BILL ANALYSIS SENATE RULES COMMITTEE AB 1059 Office of Senate Floor Analyses 1020 N Street, Suite 524 (916) 445-6614 Fax: (916) 327-4478 . THIRD READING . Bill No: AB 1059 Author: Migden (D) Amended: 9/4/97 in Senate Vote: 21 . SENATE INSURANCE COMMITTEE : 6-3, 7/2/97 AYES: Rosenthal, Hughes, Johnston, Peace, Schiff, Sher NOES: Johnson, Leslie, Lewis SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 42-35, 6/2/97 - See last page for vote . SUBJECT : Domestic partners SOURCE : The author . DIGEST : This bill requires health plans and health insurers that offer group coverage benefits to the dependents of an employee or subscriber to offer those benefits on the same terms to a domestic partner, as specified. Senate Floor Amendments of 9/4/97 delete the definition of "domestic partners" used for the purpose of determining eligibility for domestic partner coverage by a health plan or a health insurer. ANALYSIS : Existing law: 1.Provides for health insurance and health care benefits to spouses and dependents in a number of areas. 2.Prohibits discrimination based on marital status or sexual orientation in a number of contexts, including insurance. This bill: 1.Requires health plans and health insurers that provide group coverage to provide the same benefits to the domestic partner of a subscriber or employee as they provide to dependents, and subject to the same terms and conditions. 2.Requires a health care service plan or a disability insurer that provides hospital, medical or surgical benefits for employees, subscribers or other persons entitled to elect coverage and their dependents to enroll as a dependent, upon application by the employer or group administration, as a domestic partner or the employee, subscriber or that other person. 3.Specifies that nothing in this bill is to be construed to expand the requirements of federal law which were added by the Consolidated Omnibus Budget Reconciliation Act of 1985. Background : 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 Task Force report 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, for example, IBM, Apple Computer, Disney, Bank of America, Genentech, Orrick, Time Warner and, most recently, the San Francisco 49ers, provide such benefits. However, while many health plans offer this coverage to large employers, they often deny the benefit to smaller employers, with Kaiser being a notable exception. There appears to be no economic basis for excluding this coverage. 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 costs for spousal coverage. Employer fears of huge numbers of fraudulent claims also proved groundless. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 9/5/97) Aids Project Los Angeles California Church IMPACT California Labor Federation, AFL-CIO California Nurses Association California Optometric Association California School Employees Association California Teachers Association California Women's Law Center City of Berkeley City and County of San Francisco Clergy: John P. Bingham, Samaritan Counseling Center Vincent Brady, Cathedral of the Blessed Sacrament Donald G. Brown, Trinity Episcopal Cathedral Carol M. Carter, Wesley United Methodist, First United Methodist Catherine M. Campbell, Hispanic Office, Episcopal Diocese of Northern California, La Mission Hispana el Divino Salvador Barry F. Cavaghan, United Campus Ministry Steven Fietz, First Christian Church George E. Herbert, Westminster Presbyterian Church George K. Meier, Pioneer Congregational Church Jay K. Pierce, Central united Methodist Church Carlos Schneider, St. John's Lutheran Church Congress of California Seniors East Bay Municipal Utility District Kaiser Permanente Medical Care Program LIFE Lobby Older Women's League of California Santa Barbara Stonewall Democratic Club Spectrum Institute Unity Pride Coalition of Ventura County OPPOSITION : (Verified 9/5/97) Capitol Resource Institute Committee on Moral Concerns ARGUMENTS IN SUPPORT : According to the author's office, this bill was introduced to address the health insurance concerns of unmarried couples. The Unruh Civil Rights Act, as well as an explicit regulation applicable to the business of insurance, prohibits discrimination based on an individual's marital status or sexual orientation. Yet some health plans currently offer benefits to spouses that are not available to a person's unmarried partner. This problem is particularly acute for same-sex couples who cannot have their relationships recognized as marriages. Elderly couples who form committed and exclusive relationships share a similar problem. This bill helps resolve the current inequity in law with respect to health benefits. Unmarried couples will not be denied access to health benefits for their partners solely because of their sexual orientation or marital status. The author argues that more than a decade of experience with domestic partnership demonstrates that it is both pro-civil rights and pro-business. A fast-growing list of businesses is now offering domestic partner benefits to their employees, including some insurance companies. 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. Supporters present legal, health, social, religious and economic arguments in favor of the measure. On economic grounds, Spectrum Institute (SI) notes that virtually all the business-centered fears initially expressed about domestic partnership have failed to materialize. Experience has shown that the cost of providing domestic partner benefits is the same as or less than that of providing spousal benefits. Smaller employers who want to compete for employees have a hard time finding insurers who will offer this coverage. The City and County of San Francisco cites the difficulties employers face in offering domestic partner health coverage because it is unavailable or too expensive. SI notes that this bill will make it easier for small businesses to compete for a valuable pool of employees. Citing religious reasons in support, clergy from both the Protestant and Roman Catholic communities note that both the Old and New Testaments recognize a number of family forms. They argue it is possible to support the bill on moral, and specifically, on Biblical grounds. Moreover, they maintain that it is fundamentally just and right that all persons have access to health coverage. The Life Lobby and the California Nurses Association emphasize the social importance of partnership to provide mutual protection. Because of the inability to enter a recognized marriage under state law, committed same-sex couples have long struggled within the legal system to protect one another. The societal expectation that, when one partner has a job, the other will be covered for health costs breaks down with same-sex couples. This not only creates hardships for both partners, but exacts a cost to the state. The state may be called upon to pick up the costs for the uninsured domestic partner. Various supporters also present the legal argument that this bill is a matter of civil rights and equal protection under the law. ARGUMENTS IN OPPOSITION : The Committee on Moral Concerns opposes the bill, emphasizing five points. 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 permanency 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 the 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, loss of jobs and insurance coverage for other workers. Fifth, the historical family arrangement works best for society. The Capitol Resource Institute opposes this bill because it would force insurance companies to offer domestic partner benefits to employers, which they can already do. ASSEMBLY FLOOR : AYES: Alquist, Aroner, Bowen, Brewer, Brown, Caldera, Cardenas, Cunneen, Davis, Ducheny, Escutia, Figueroa, Firestone, Floyd, Gallegos, Hertzberg, Honda, Keeley, Knox, Kuehl, Kuykendall, Lempert, Martinez, Mazzoni, Migden, Murray, Napolitano, Ortiz, Papan, Perata, Scott, Shelley, Strom-Martin, Sweeney, Thomson, Torlakson, Villaraigosa, Vincent, Wayne, Wildman, Wright, Bustamante NOES: Ackerman, Aguiar, Alby, Ashburn, Baldwin, Battin, Baugh, Bordonaro, Bowler, Campbell, Cardoza, Frusetta, Goldsmith, Granlund, Havice, House, Kaloogian, Leach, Leonard, Margett, McClintock, Miller, Morrissey, Morrow, Olberg, Oller, Pacheco, Poochigian, Prenter, Pringle, Runner, Takasugi, Thompson, Washington, Woods NOT VOTING: Baca, Machado, Richter DLW:ctl 9/5/97 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****