Interim Joint Committee on State Government


Minutes of the<MeetNo1> 4th Meeting

of the 2014 Interim


<MeetMDY1> October 22, 2014


Call to Order and Roll Call

The<MeetNo2> fourth meeting of the Interim Joint Committee on State Government was held on<Day> Wednesday,<MeetMDY2> October 22, 2014, at<MeetTime> 1:00 PM, in<Room> Room 154 of the Capitol Annex. Senator Joe Bowen, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Joe Bowen, Co-Chair; Representative Brent Yonts, Co-Chair; Senators Ernie Harris, Stan Humphries, Christian McDaniel, Morgan McGarvey, R. J. Palmer II, Albert Robinson, Damon Thayer, and Reginald Thomas; Representatives Kevin Bratcher, Dwight Butler, John Carney, Larry Clark, Leslie Combs, Joseph Fischer, Derrick Graham, Mike Harmon, James Kay, Martha Jane King, Jimmie Lee, Mary Lou Marzian, David Meade, Suzanne Miles, Brad Montell, Sannie Overly, Darryl Owens, Tanya Pullin, Tom Riner, Bart Rowland, Steven Rudy, Sal Santoro, Diane St. Onge, Tommy Turner, Ken Upchurch, and Jim Wayne.


Guests: Chief Justice John Minton, Kentucky Supreme Court; Senator John Schickel; Joe Cowles and Sharron Burton, Personnel Cabinet.


LRC Staff: Judy Fritz, Kevin Devlin, Alisha Miller, Karen Powell, Terrance Sullivan, and Peggy Sciantarelli.


Introductory Comments

Senator Robinson and Representative Marzian recognized constituents in the audience. Senator Robinson also spoke about a Bath County constituent who died recently at age 107.


Approval of Minutes

The minutes of the September 24 meeting were approved without objection upon motion by Representative Marzian.


Kentucky Employees’ Health Plan (KEHP)

Joe Cowles, Commissioner, Department of Employee Insurance, and Sharron Burton, Deputy Executive Director, Office of Legal Services, represented the Personnel Cabinet. At the September meeting, Mr. Cowles and Ms. Burton discussed the 2015 plan year and 2014 accomplishments but were asked to return to the October meeting for further discussion.


Mr. Cowles said KEHP began a three-year strategic approach in 2012 to promote personal health awareness and increase health and insurance literacy. Using the “LivingWell” brand, the 2014 plan design integrated wellness and introduced consumer-driven plan options. Results have been good. Members became more educated in choosing a health plan and understanding the true cost of medical services and prescription drugs. The completion rate for the health assessment was 97.5 percent. Members who failed to fulfill the LivingWell Promise in 2014 will be eligible only for the standard plan options in 2015. If failure was due to a physical or mental health condition, KEHP will work with the member to develop an alternative way to qualify for LivingWell plan options.


The LivingWell plans offer better benefits in the form of lower member coinsurance, lower deductibles, and lower out-of-pocket maximums. Enrollment was 81 percent in LivingWell plans in 2014, and 43 percent of members chose a consumer-driven (CDHP) plan. In 2013, early (pre-65) retirees were not eligible for CDHP-type plans because of a legal interpretation by Kentucky Retirement Systems, but 27 percent of early retirees chose CDHP plans in 2014. Total CDHP enrollment increased from 12,869 in 2013 to 65,142 in 2014. The generic prescription rate increased from 80 percent to 83 percent, saving KEHP several million dollars. The number of employees electing tobacco use plans increased 28.72 percent due to expansion of the product range, extension of the smoker rate to adult dependents, and explicit reference to the tobacco use surcharge in enrollment literature. KEHP achieved its health awareness and cost transparency goals for 2014.


The wellness approach is making progress and leading to a cultural change in member health awareness. It the past, it was not uncommon for KEHP to incur monthly medical expense of $110-$115 million. In 2014, the cost has not exceeded $100 million in any month. Participation in disease management and wellness programs has increased. Medical and pharmacy trends are good.


The 2015 Requests for Proposals (RFPs) brought significant savings to KEHP. For the first time in history KEHP was able to keep premiums flat for the new plan year. Premiums are reduced for some tiers of the Standard CDHP plan. Anthem Blue Cross Blue Shield (Anthem) will replace Humana as medical network and claims administrator. Anthem has operated in Kentucky for over 75 years and is the largest insurance carrier in the state. The network includes all hospitals and 96 percent of providers. CVS/Caremark, the new pharmacy benefits administrator, is the second largest in the country, with a national network of over 67,000 pharmacies. WageWorks is the new administrator of flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs). HumanaVitality and Compass SmartShopper (formerly Compass ChoiceRewards) will continue to partner with KEHP. More than 2,000 KEHP members have utilized Compass since the pilot program began in 2013, earning incentives of over $200,000.


Plan options for 2015 are the same as for 2014. LivingWell plans require the plan holder to fulfill the LivingWell Promise by completing either the online HumanaVitality Health Assessment or a Vitality Check (biometric screen) between January 1 and May 1, 2015. The biometric screening and other preventive services are covered 100 percent. Copays for allergy injections and mental health office visits have been reduced. A cap on out-of-pocket pharmacy costs is a benefit enhancement of the two PPO plans.


For the first time, up to $500 of unused healthcare FSA funds will carry over to the next calendar year. Due to federal law changes, employees who are eligible to waive KEHP health insurance coverage in 2015 and choose a Waiver (general purpose) HRA may do so only if the employee has other group health coverage that provides minimum value. Members covered by individual policies purchased through Kynect or governmental plans such as Tricare, Medicare, or Medicaid are no longer eligible.


Responding to Senator Bowen, Mr. Cowles said health care costs in Kentucky have traditionally been higher because of the population’s poor health status. The cost trend is improving, however. Medical and pharmacy spending was down in 2014. KEHP is planning a cost trend study of the 2014 plan year.


Representative Graham commended the Personnel Cabinet and the executive branch administration for their hard work to provide affordable health care for state employees and teachers.


Responding to a request from Representative Riner, Mr. Cowles said he would e-mail information to him about the 2013 Gallup-Healthways Well-Being Index.


Representative St. Onge said KEHP informational materials should clarify that ineligibility for the Waiver (general purpose) HRA applies to individual policies purchased directly from an insurance company as well as individual policies purchased through Kynect. KEHP should also clarify that claims to be paid from FSA funds must be substantiated by March 31 of the following year.


When Representative Harmon asked whether the cabinet followed up with members who failed to complete the LivingWell Promise in 2014, Mr. Cowles said the members were sent letters on May 31, and their insurance coordinators were notified. A grievance process was also in place.


Responding to Representative Carney, Mr. Cowles said that members who default into the Standard CDHP plan in 2015 for failure to complete the LivingWell Promise will retain eligibility for LivingWell plans in 2016.


When Representative Montell asked about future solvency of the insurance fund, Mr. Cowles said that initial cost projections are positive, so long as there is not a massive increase in utilization. There may be small cost increases in 2016, but a major increase is not anticipated.


Representative Marzian said she appreciates the mental health copay decrease, the 90-day supply pharmacy option, and the Compass SmartShopper program. She also commended the decision by CVS pharmacies to quit selling tobacco products.


Senator Bowen thanked Mr. Cowles and suggested that he consider having an open forum for members of the General Assembly who express a need for additional information.


Judicial Redistricting

John D. Minton, Jr., Chief Justice of the Kentucky Supreme Court, discussed Kentucky Constitution provisions governing appellate districts, judicial circuits, and judicial districts, and plans for future realignment of district boundaries.


Chief Justice Minton said Section 110(4) of the Constitution states that the General Assembly may redistrict the Commonwealth, by counties, into seven Supreme Court districts as nearly equal in population and as compact in form as possible, with one justice from each Supreme Court district. Current appellate districts were last realigned by the General Assembly in 1972.


Senator Thayer expressed concern about caseload size in northern Kentucky and Jefferson County and other heavily populated areas. He questioned whether judicial redistricting should be based on population, within the plus or minus five percent parameter used for redrawing legislative districts.


Chief Justice Minton said the 1972 district boundaries were proposed without benefit of computerized population data. The “one person, one vote” principle that has been imposed by the federal courts does not apply to the judiciary. Unlike the legislature, the state judiciary is not the body responsible for achieving representative government. Judges do not represent people; they serve people.


Kentucky Constitution sections 112(2) and 113(2) require judicial circuits and districts to be as compact in form as possible, with counties contiguous and no county divided. The General Assembly has power to reduce, increase, or rearrange district boundaries, but the need must first be certified by the Supreme Court. The General Assembly may also change the number of judges in judicial circuits and districts, but only upon certification of necessity by the Supreme Court. There is little difference between the maps of the existing 56 judicial circuits and 59 judicial districts.


Kentucky Constitution Section 112(6) created family courts as a division of circuit court. Family courts are in 71 counties and serve approximately 85 percent of the state population. There are 51 family court judges. Chief Justice Minton said he is concerned that the judicial system has not been able to make family court available in every circuit. It is a goal of the judicial system to ensure that justice is delivered equally to all citizens. Judges must be conveniently located to the people they serve but do not have to be distributed on a per capita basis. The Constitution requires circuit and district court to be held in each county. These principles were adopted in 1972 in Kentucky State Bar Association v. Taylor, which opined that the “one man, one vote” principle should not and does not apply to the judiciary. The 1850 and 1891 Kentucky Constitutions instructed the General Assembly, when undertaking judicial redistricting, to consider population, accessibility, convenience, distance between counties, crowded dockets, and disproportionate workload of judges. Though not required in the current Constitution, those factors remain important.


The 2014 Judicial Branch budget bill (House Bill 238) directs the Administrative Office of the Courts (AOC) to develop and implement a weighted caseload system to precisely measure and compare judicial caseloads throughout the Commonwealth on the circuit court, family court, and district court levels for the purpose of recommending a plan to realign circuit and district judicial boundaries. It also states that the plan shall be submitted to the House and Senate Judiciary Committees by January 15, 2016. The AOC Judicial Workload Assessment Study Committee is holding its first meeting today. The National Center for State Courts (NCSC) will assist with the study. NCSC has conducted similar studies and established weighted caseloads for courts in other states, including Virginia, West Virginia, North Carolina, Florida, Alabama, and Michigan. Goals of the study are: develop a system for measuring workload of trial judges; determine the number of judges needed to resolve all cases coming before the courts; allocate resources effectively and efficiently; and provide a thorough understanding of judicial workload as a necessary first step in the process of judicial boundary realignment. Caseload does not always reflect actual workload. Population is important since it significantly impacts workload, but it is only one factor to be considered. The study committee’s membership includes district, circuit, and court of appeals judges, circuit clerks, and prosecutors.


Senator John Schickel discussed Senate Bill 72, relating to judicial redistricting, which he sponsored in the 2014 regular session. The legislation, which passed the Senate, would require the Supreme Court, in years where legislative redistricting is required, to analyze the geographical arrangement of judicial circuits and districts and the assignment of judges relative to population or caseload. Senator Schickel said the General Assembly should assist the judiciary by providing guidelines. Current district alignment does not afford equal justice under law. He commended Chief Justice Minton for addressing this important issue.


Senator Schickel asked that a letter he received recently from Senate President Robert Stivers in support of Senate Bill 72 be entered into the meeting record. (Senator Stivers’ letter is included in the official record of this meeting on file in the Legislative Research Commission library.)


Responding to Senator Bowen, Senator Schickel said he agrees with Justice Minton that caseload does not necessarily mirror actual workload. AOC is to be commended for the workload study. Enactment of a plan based on the study results may be difficult politically. It will require a cooperative effort between AOC and the General Assembly.


Responding to questions from Representative Yonts, Chief Justice Minton said that redrawing of appellate district boundaries can be done at any session of the General Assembly. AOC will need to work aggressively in order to complete the workload study and present a proposed realignment of judicial circuits and districts to the Judiciary Committee by January 2016. It will be necessary to define how cases will be counted, since the method differs between counties and involves many in the legal community. There will be widespread interest and concern after the study results become public. It is important for the validity of the process to be as open as possible and invite input from all parties involved. It is a difficult issue that will call for statesmanship from both the judicial and legislative branches. Any proposed boundary realignment will not impact the terms of sitting judges.


Responding to comments from Representative Owens, Chief Justice Minton said the General Assembly will ultimately have to decide whether to accept AOC’s recommendations. He does not expect unanimity but hopes that everyone involved will agree that the process is fair. Representative Owens questioned whether the “suggested plan of correction” language in Senate Bill 72 may need to be changed to agree with language empowering the General Assembly in Constitution Sections 112 and 113. Senator Schickel said he believes the legislation is constitutional as drafted but can be amended if necessary.


Senator Thayer said that the General Assembly redrew appellate districts in the 2012 House and Senate redistricting legislation that was subsequently ruled out by the courts. He suggested that the General Assembly consider redrawing Court of Appeals and Supreme Court districts in the 2015 regular session. Efforts could then be concentrated on realignment of judicial circuits and districts. After results of the workload study mandated by the judicial branch budget bill are presented to the General Assembly in January 2016, input can be sought from the judicial and legal community.


Senator Schickel said equal justice for all citizens is the main issue. It is also important to increase funding to the judicial branch. This would require assurance that resources are properly allocated, which is impeded by the current geographical arrangement of districts and caseload imbalance.


Responding to questions from Representative Fischer, Chief Justice Minton said that population does not impact workload in the appellate districts because cases are assigned statewide to the 14 court of appeals judges and seven supreme court justices. He anticipates that the workload assessment study recommendations will be specific in nature. They will also be fully vetted publicly.


Representative St. Onge said the General Assembly may or may not want to change the plan eventually proposed by AOC but probably should review it and accept it as submitted. The workload study will be fact-based with widespread input, and the recommendations will be proposed by those who have the proper expertise.


Senator Robinson stated for the record his belief that it is unfair and unconstitutional for Franklin Circuit Court to try cases filed in other areas of the state. He is concerned that those cases are not being tried by their peers or in close proximity to where they originate.


Representative Graham said that Franklin Circuit Court resides at the seat of state government, where laws are made. Circuit judges serving there have been recognized as outstanding by their peers.


Senator Bowen thanked Justice Minton and said the General Assembly looks forward to receiving results of the workload assessment study. With business concluded, the meeting was adjourned at 2:50 p.m.