MINUTES OF MEETING

      ASSEMBLY COMMITTEE ON ELECTIONS AND PROCEDURES

 

      Sixty-seventh Session

      April 8, 1993

 

 

 

The Assembly Committee on Elections and Procedures was called to order by Chairman Myrna T. Williams at 3:35 p.m., Thursday, April 8, 1993, in Room 331 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

      Mrs. Myrna T. Williams, Chairman

      Mr. Robert E. Price, Vice Chairman

      Mr. Joseph E. Dini, Jr.

      Mrs. Jan Evans

      Mr. Val Z. Garner

      Mr. David E. Humke

      Mrs. Joan A. Lambert

      Mr. William A. Petrak

      Mr. Gene T. Porter

      Mr. Robert M. Sader

      Mr. Scott Scherer

 

 

COMMITTEE MEMBERS ABSENT:

 

      Mr. Robert M. Sader

 

GUEST LEGISLATORS PRESENT:

 

      Assemblyman Douglas A. Bache, District No. 11

 

STAFF MEMBERS PRESENT:

 

      Mr. Robert Erickson/Research Director, Legislative Counsel Bureau

      Mr. Gary Crews/Legislative Auditor    

 

OTHERS PRESENT:

 

      Mr. Robert J. Gagnier/Executive Director, State of Nevada Employees Association

      Mr. Howard Barrett/Nevada Taxpayers Association

      Mr. David Thomas/Risk Management

      Dr. James T. Richardson/Nevada Faculty Alliance, Dept. of Sociology

 

 

 

AB 206:     Requires legislative auditor to conduct performance audit of state's program of group health insurance that is provided by committee on benefits through plan of self-insurance.

 

Assemblyman Douglas A. Bache, District No. 11, prime sponsor of AB 206, began his testimony by stating AB 206 was submitted by request from a number of his constituents who were members of the Health Insurance Plan through the state of Nevada.  The large rate increases in 1992 prompted their concern.  Had the increases occurred in incremental steps, Mr. Bache believed constituents would not have been as disturbed.  His constituents knew the committee on benefits provided periodic audits so they wanted an outside agency to audit the committee on benefits.

 

At this time, Mr. Petrak requested the amount of the fiscal note. 

 

Mr. Gary Crews, Legislative Auditor, answered Mr. Petrak's question by stating the fiscal note attached to the bill provided $7,500 for in-state travel costs.  Since a substantial portion of the function was administered in Las Vegas, the Legislative Auditor's budget did not include money for travel to Las Vegas.  Mr. Crews asked committee for an amendment to AB 206 if the committee had the Legislative Auditor's office perform the audit.  Other associated costs, such as personnel, would be absorbed in Legislative Auditor's operating budget.

 

Mrs. Williams then announced the committee would hear proponents of AB 206.

 

Mr. Robert J. Gagnier/Executive Director, State of Nevada Employees Association, testified in favor of AB 206.  The bill, he felt, would clear the air about actions which occurred in 1992, and perusal would be good for everybody.

 

Mr. Gagnier referred to Mr. Crews' suggestion of an amendment, and suggested further amending the bill by striking under Section 1, No. 1, the words through a plan of self-insurance thereby including the entire plan and not limiting the bill to self-insurance. 

 

Mrs. Lambert asked Mr. Crews if the amendment which Mr. Gagnier proposed would increase the cost.

 

Mr. Crews answered Mrs. Lambert's question by explaining the $7500 only addressed travel and was based on the assumption the audit would not look at the quality of medical care or actuarial assumptions.  If these issues were included, the audit would probably require contracting with someone specializing in those areas which would increase the cost.  He went on to say the present assumption was AB 206 primarily applied to the fiscal administration of the fund.

 

Commenting on AB 206, Mr. Howard Barrett, Nevada Taxpayers Association, explained he supported the bill because, according to the auditors' reports, actuarial reports submitted August 26 to the committee by W. F. Barron, the group insurance committee had receipts of $60 million and expenditures of $67 million.  Because of some changes, the situation had been somewhat corrected, but he felt on the basis of the auditors' reports, a review of benefits by the legislative auditor was warranted.

 

Mrs. Williams then announced the committee would hear opponents of AB 206.

 

Mr. David Thomas, Risk Management, who served as an advisor to the committee on benefits, stated he was not speaking in opposition to the bill on behalf of the committee because the committee took no position.  However, Mr. Thomas pointed out, while he agreed with Mr. Crews' estimate of the travel costs when travel was restricted to a fiscal analysis of the plan, if AB 206 was amended to include other provisions of the group insurance plan, he felt significant additional travel costs would be required since the actuary was in Cleveland, the consultant in Stockton, and life insurance was administered through Travelers located in Denver.

 

Because audits were done on an annual basis currently, Mr. Thomas believed new audits would be a duplication of work already being done.  He said the committee on benefits entered into a four year contract last year to conduct an annual financial audit of the entire self-funded plan and a claims testing audit of the claims administration function performed by Mutual Administrators.  Any further costs of AB 206 would be in addition to costs being paid under the four year contract.  Those costs would go back to the participants in the plan and affect the rate structure of the plan.  The costs would not be borne by the state, but by the participants either through the budget process or directly as a charge, he repeated.

 

At this point in Mr. Thomas' testimony, Mrs. Williams asked if the audits currently being done were performance audits or fiscal audits.  In responding to Mrs. Williams' question, Mr. Thomas said he was uncertain of the definition of a performance audit, and no definition was given in AB 206 of a performance audit.  At this point, he discussed audits by his own definitions of the names.  Mrs. Williams pointed out performance audits were done, and she would ask Mr. Crews what the audits entailed.

 

Mr. Dini continued the discussion and said the committee wanted to know if Mr. Thomas was following the mandate of the legislature in the law which provided the workers of the state of Nevada a decent health plan.  Mr. Dini declared his disappointment in the plan and felt the plan needed some work.

 

Mr. Price expressed his opinion if a law stating the state at its own expense provided a performance audit, Mr. Thomas should be able to adjust his contracts with other people, and eventually the expense would be less for Mr. Thomas.

 

Mr. Thomas agreed with Mr. Price and explained he was not necessarily in opposition to the concept of making a performance report.  An annual report to the legislature of the performance of the plan should be done, he conveyed.  His purpose was to point out to the committee some of the things being done were somewhat duplicative, he reiterated .  Responding to Mr. Price, he declared his contracts could be adjusted.

 

Mrs. Williams explained she did not believe AB 206 had anything to do with Mr. Thomas's contracts.  The bill was an independent audit which was often done on programs and agencies unrelated to anything Mr. Thomas could be doing internally.  Mrs. Williams went on to say it was the responsibility of the committee to make sure anything under the responsibility of the legislature was working to the intent of the legislature and in the best interests of the people served by a program or agency.  She further asked Mr. Crews for clarification of Mr. Thomas' statement the legislative audit which was called for in AB 206 would impact cost to rate payers.  She questioned if portions of audits were conducted in several cities or states.

 

Mr. Crews answered the question by explaining he had faced the same situation in the past with no difficulty.  It required dual travel money, but was not unique from previous audits performed.

 

Mr. Dini then asked if funding would be through the legislative fund or charged to the agency.  Responding to Mr. Dini's question, Mrs. Williams related she had been informed by Mr. Crews an additional $7,500 fiscal note for travel only would be required.  She asked for confirmation of her statement from Mr. Crews.

 

A discussion ensued among Mr. Crews, Mrs. Williams and Mr. Dini regarding costs and funding of AB 206, with Mr. Dini raising the possibility of funding the bill from the legislative fund. 

Mrs. Williams questioned the fiscal impact of Mr. Gagnier's proposed amendment to AB 206, Section 1, No. 1, on Line 3, which omitted the words, through a plan of self insurance.  An estimate of an additional $5,000 was given by Mr. Crews.

 

Dr. James T. Richardson, Nevada Faculty Alliance, an opponent of AB 206, spoke next and stated he had mixed feelings about AB 206 as a straight fiscal audit.  He pointed to a lack of confidence brought on by the dramatic rate increases the past year among participants in the fund.  He, therefore, felt a fiscal audit would renew confidence in the fund.  The audit would confirm the amount of reserves in the fund, Dr. Richardson asserted.  He elaborated on the point of a philosophy change which he said caused the rate increases for health insurance.  The philosophy had previously been the program of subsidization and shifting of funds from the active employees rate to help cover costs of dependents' and retirees' benefits, and had changed to reflect dependents and retirees should completely fund their own benefit cost.  Dr. Richardson felt AB 206 did not address this change of philosophy and the bill should be changed so that it was part of the purview of the study.

 

Mrs. Williams gave the committee a copy of a letter she received from Jeanne Adams (Exhibit C) concerning AB 206 and noted it was submitted for the record.

 

Mrs. Williams appointed a subcommittee of Mr. Dini, Mr. Porter and Mrs. Lambert to make recommendations to the committee.

 

In closing, Mrs. Williams stated she was not a member of the State Health Plan.  She previously had been a member, but found the cost was too much for too little.

 

There being no further business to come before committee, the meeting was adjourned at 4:00 p.m.

 

      RESPECTFULLY SUBMITTED:

 

 

 

                             

      BOBBIE MIKESELL

      Committee Secretary

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Assembly Committee on Elections and Procedures

April 8, 1993

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