Interim Joint Committee on Banking and Insurance


Minutes of the<MeetNo1> 5th Meeting

of the 2005 Interim


<MeetMDY1> October 13, 2005


The<MeetNo2> 5th meeting of the Interim Joint Committee on Banking and Insurance was held on<Day> Thursday,<MeetMDY2> October 13, 2005, at<MeetTime> 10:00 AM, at the First National Bank of Lexington, 2404 Sir Barton Way, Lexington, Kentucky. Senator Tom Buford, Co-Chair, and Representative Jim Bruce, Co-Chair,  called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Tom Buford, Co-Chair; Representative James E Bruce, Co-Chair; Senators Ernie Harris,  Robert J (Bob) Leeper, Richard "Dick" Roeding, Dan Seum, and Tim Shaughnessy; Representatives James R Comer Jr, Ron Crimm, Robert R Damron, Mike Denham, Ted "Teddy" Edmonds, Joseph M Fischer, Danny R Ford, Jim Gooch Jr, Jimmy Higdon, Dennis Keene, Charles E Meade, Rick W Rand, Steve Riggs, Brandon D Smith, Tommy Thompson, Ken Upchurch, Susan Westrom, Rob Wilkey, and Addia Wuchner.


Guests:  Debra Stamper and John Cooper, Kentucky Banker's Association; Rachel Phelps, Dustin Miller and Leslie Young, Kentucky Association of Health Plans and,  Jim Fritz, President, Bluegrass Family Health Insurance, and Chairman, Kentucky Association of Health Plans.


LRC Staff:  Greg Freedman, Rhonda Franklin and Jamie Griffin.


            The minutes of the September 27, 2005, meeting were approved.


Nancy Stone, Executive Director, Jessamine County Chamber of Commerce, and representative of the Central Kentucky Alliance, welcomed the committee to Lexington.


Dorsey Hall, Terry Fork and Debbie Reynolds with First National Bank of Lexington, welcomed the committee to the bank.


John Cooper discussed the concerns the Kentucky Bankers Association has regarding the structure of the Environmental and Public Protection Cabinet.  He stated that the Office of Financial Institutions and the Office of Insurance were moved to the Cabinet when the administration combined three cabinets.  He stated that they would like to see the Office of Financial Institutions and the Office of Insurance moved to the Commerce Cabinet or possibly create a another entity.  He stated that there are so many issues in the Banking and Insurance industry at this time that they need special attention.  He stated that the Kentucky Banker's Association is talking to the administration regarding this suggested change.


Representative Steve Riggs stated that he had legislation in mind to stress the priority that insurance in the state should be given.


Senator Tom Buford stated that the Office of Financial Institutions generates a significant amount of income for the state and should be given immediate attention.


Debra Stamper, General Counsel, Kentucky Banker's Association, addressed the committee regarding possible legislation for the upcoming session.  She stated that they have five areas of interest.  She stated the first issue is that the Revenue Cabinet has legislation regarding data match on tax collection.  She said the industry has strong concerns regarding the banking industry's role in collection and the protection of consumers.  She stated that this would put banks in the business of collecting taxes as well as fines and fees relating to delinquent taxes, environmental fines, and basically any fee owed to the state.


Representative Mike Denham stated that as a banker he would be very concerned regarding liability and conflict with the Federal Privacy Laws.  He stated that he felt sure  this would increase costs for banks as well.


Ms. Stamper stated that a second item maybe legislation regarding identity theft.  She stated that there is a bill in Congress that is almost identical to what the Attorney General's Task Force is proposing and there are concerns that state legislation not make it more difficult for consumers in relation to credit reports. 


The third item for legislation would increase mandatory penalties for armed robberies.  She stated that this has become a very serious issue.


The fourth item would require effective acknowledgment of faulty mortgages which are properly recorded. 


The fifth item involves misuse of bank names.  She stated that it needs to be clear in the Kentucky Revised Statutes that no one but a bank can use it's name and information.


John Cooper stated  he feels the upcoming Regular Legislative Session will be very active.


Jim Fritz, President, Bluegrass Family Health, and Chairman, Kentucky Association of Health Plans, stated that the association members consist of Anthem, Bluegrass Family Health, CHA, United, Humana and Passport.  He stated that they cover 2 1/2 million lives and employ 10,000 people.  He stated that they are committed to provide affordable health insurance and look forward to working with the committee.


Rachel Phelps, Kentucky Association of Health Plans, gave a brief history of the insurance industry and health insurance reform in Kentucky.  She stated that eighty-eight cents of every premium dollar goes to provider services and benefits and the remaining twelve cents goes to administrative costs.  Ms. Phelps briefly outlined the trends in Kentucky relating to healthcare spending.  She stated that in Kentucky some of the cost drivers are related to lifestyle choices such as; adult smoking, teen tobacco use, and lack of physical activity which results in cancer deaths, cardiovascular disease and one of the highest percentages of obesity in the nation.  She stated that the high utilization in Kentucky is mainly related to lifestyle choices.  She stated that some of the other cost drivers are the aging population, technology, cost of services, administrative requirements and an unfavorable legal climate.


Representative Bob Leeper asked if the data regarding Kentucky trends in healthcare spending was for the private market only.


Ms. Phelps stated yes it was only for the private market and Medicare was not included.


Dustin Miller stated that some of the legislation they are looking at for the 2006 Regular Legislative Session may include; consumer driven healthcare initiatives, civil justice reform and simplification of administrative requirements.  He stated they have not taken a position on these issues at this time.


With no further business, the meeting adjourned.