LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol. It contains news on Pennsylvania legislation and regulations impacting the Insurance and Business Communities. It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU). PHILLIPS ASSOCIATES at 717/728-1217 or e-mail to xenobun@aol.com. www.vphillipsassoc.com
CONSOLIDATION ISSUE NOW ON TABLE
Media reports over the weekend confirmed that Governor Tom Wolf is likely to try consolidating several cabinet departments as a way to reduce budget expenses this fiscal year as part of his effort to mitigate a HUGE budget deficit at the end of this fiscal year. Presumably, this would mean consolidation of the PA Department of Aging, Department of Health and the PA Department of Drug & Alcohol Programs into a renamed PA Department of Health and Human Services (now the Dept. of Human Services). What gives this added weight is the firing of PA Department of Drug & Alcohol Programs Secretary Gary Tennis. Although no reason was given, Reading news media speculated that Tennis utilized a long-time lobbyist Deb Beck to vet potential employees, prompting his removal. Former Secretary Tennis and Rep. Gene DiGirolamo (R-Bucks), majority chair of the House Human Services Committee, convened a press event in the Representative’s office to present an alternative explanation. Tennis said that this particular employee had already been chosen for a position and that he suggested to her that she visit with Beck for background on PA’s effort to confront drug and alcohol abuse and that no employment screening was involved. The employee was later let go by Tennis and she filed a formal complaint about her termination. Tennis said that his termination came because he opposed the consolidation of his department. What makes this dicey is that there will be legislative pushback against the consolidation which could affect negotiations on the FY 2017-18 State Budget.
New Acting Secretary Jen Smith and the Governor’s Office will be forced to field questions on this during Appropriations Committees’ hearings in February. Smith was named Acting Secretary January 24. She has served the Department of Drug & Alcohol Programs as Deputy Secretary since November 2015.
OTHER BUDGET NEWS
PA received a $19.4 million settlement from Moody’s as part of a larger multi-state settlement regarding assertions that Moody’s misrepresented its objectivity in rating mortgage-backed securities prior to the Great Recession….. On January 25, the Independent Fiscal Office released its Mid-Year Update which says that PA revenue estimate for this fiscal year is $250 million lower than previously estimated. This puts the estimated budget deficit well over $700 million for the current fiscal year ending June 30, 2017.
MILLER HEADS NAIC TASK FORCE
PA Insurance Commissioner Teresa Miller was named chair of a National Association of Insurance Commissioners (NAIC) national task force on insurance issues affecting senior citizens. Previously, she chaired the NAIC Long-Term Care Innovation subcommittee. She also chaired the NAIC Property/Casualty Committee in 2016. Most recently in Pennsylvania under Miller, the PA Insurance Department issued a Notice reducing required compound inflation protection from 3% to one-percent for Qualified Long-Term Care Partnership insurance policies. This Notice was an attempt to rejuvenate the sagging LTC Partnership market by making policies more affordable.
MORE ON REAL ID
Last LEG REG Review reported that the Federal Government had given PA until June to comply with REAL ID and undue legislation passed by the General Assembly (Act 38 of 2012). If not done, Pennsylvanians would be unable to use their driver’s license as identification in entering most federal facilities this year and for commercial air flights in 2018. On January 24, House Speaker Mike Turzai (R-Allegheny) and House State Government Committee majority chair Daryl Metcalfe (R-Butler) sent a letter to President Trump and Homeland Security Secretary-Designate John Kelly asking the Federal Government to leave PA alone, saying that Pennsylvania passed Act 38 because:
- State’s Right States have traditionally regulated drivers’ licenses and not the U.S.
- Cost of REAL ID imposes an unfunded mandate on states. Although PA received $5.4 million from the Federal Government, the cost to PA taxpayers would be $141 million in set-up and $39 million in annual costs.
- Inconvenience to citizens. PA drivers would have to bring birth documentation to PennDOT offices to receive the new license.
- Privacy is a concern since the Federal Government would have a national registry with uncertain safeguards against fraud or Identity Theft.
INSURANCE LEGISLATIVE ACTION
- On January 25, the House Insurance Committee moved House Bill 152 (Quinn-R-Bucks) providing for a life insurance database and Insurance Department help in tracking down insurers. PAHU supports this bill.
- The prescription drug price transparency House Insurance Committee hearing taking place on February 8 is focusing on a particular bill; House Bill 161 (DeLuca-D-Allegheny) filed January 20.
UNLICENSED PROPERTY INSURANCE SALE BILL REINTRODUCED
Senator Tom McGarrigle (R-Delaware/Chester) reintroduced legislation that would allow unlicensed retail clerks working for self-storage unit companies to sell property (contents) insurance without an insurance license. Senate Bill 90 would authorize a limited line of authority to the storage unit company itself. PA Association of Health Underwriters (PAHU) and Independent Agents & Brokers (IA&B) have traditionally opposed this legislation as has the PA Insurance Department.
CONSTRUCTION BILLS INTRODUCED
- House Bill1 62 (Maloney-R-Berks) would allow Pennsylvanians to examine the International Building Codes. Filed January 20
- House Bill 266 (Harper-R-Montgomery) clarifies the law regarding Uniform Construction Code municipal boards reviewing appeals of Code administrator decisions. Filed January 27.
- Senate Bill 212 (Leach-D-Montgomery/Delaware) exempts construction costs for a LEEDS (green building code) compliant school building from an Act 34 formula which mandates a referendum if school district construction costs exceed a certain amount.
TORT REFORM BILLS INTRODUCED
- House Bill 258 (Kauffman-R-Franklin) provides a statute of repose (limiting product liability legal actions) initiated after 15 years. Filed January 27.
- House Bill 238 (Kampf-R-Chester/Montgomery) provides for transparency of claims made against asbestos-related bankruptcy trusts. Filed January 26.
PA AGENCIES RECOGNIZED by Rough Notes magazine include Paoli-based Simkiss & Block and Lancaster-based Murray Securus. They are among twelve candidates for the prestigious Agency of the Year Award. IN CASE YOU MISSED IT…A first-class stamp has gone back up again to 49 cents after almost a year of reduced cost (47 cents). Additional ounces for a first-class letter remain 21 cents.