Feb 20, 2004  |  By: ADRIAN BRUNE  | COMMENTS     

RICHMOND, Va. — The Virginia House of Delegates narrowly approved legislation that would allow private companies to extend health insurance benefits to their employees’ domestic partners, and sent it on to the state Senate for consideration.

The bill, which was introduced by Del. James Dillard (R-Fairfax) and resoundingly defeated a year ago, was approved by the House Commerce & Labor Committee by a 12-10 vote on Feb. 13 and passed the House by a 51-48 margin earlier this week. Proponents of the measure attributed its success during this session to a shift in strategy that heavily accentuated its pro-business advantages while downplaying it as a gay rights measure.

“We were able to push this through because the gay community kept a very low profile and let us keep the focus on business recruitment,” Dillard said. “There wasn’t a single gay person who testified in front of the committee. They stood in the hall outside of the committee room and waited for the outcome.”

Virginia is the only state in the country to restrict the level of insurance coverage businesses can offer their employees, according to the Human Rights Campaign. As it stands, only large corporations that self-insure can bypass the regulations of the Virginia Bureau of Insurance, which limit outside providers to insuring the spouse and dependent children of employees.

While gay rights advocates accepted a backseat role as the legislation moved through the house, “pro-family” groups lobbied heavily since the beginning of the session to drive it off course. They claimed the new policy would not only promote irresponsible behavior on the part of “at-risk classes,” but also leave current policyholders to shoulder the costs of such conduct through higher insurance rates.

“What was initially intended as a solution to an existing problem may actually exasperate it by escalating the costs of coverage,” said Victoria Cobb, the legislative director of the Family Foundation of Virginia, in a statement.

Loss of business?
Dillard said he introduced his bill to recruit businesses reluctant to relocate to Virginia because of the restraints placed on company insurance policies. For example, the American Psychiatric Association, one of the organizations impacted by Dillard’s legislation, was forced to rescind its domestic partner benefits upon moving to Virginia from Washington, D.C. — a reality they discovered only after unpacking the boxes.

The current law also leaves larger national businesses, such as Kroger, United Airlines and Versar, an environmental and architectural engineering firm, in a Catch-22 when it comes to maintaining divisions in Virginia. Most insure the domestic partners of their employees as permitted by other states, but their Virginia employees don’t receive the same compensation packages. This adversely affects their ability to recruit and retain good labor, many argued in letters to the committee.

“Versar needs the tools to bring employees to our offices and keep them there. This is especially important when competing with larger companies who are able to offer these benefits because they are headquartered elsewhere,” wrote Dr. Theodore Prociv, Versar’s CEO. “It is disheartening to learn that our hands are tied — in an area where we expected to have the freedom to decide what is best for our company.”

Self-insured companies not subject to the Virginia law even advocated in favor of Dillard’s bill on behalf of smaller corporations. Approximately 32 Fortune 500 companies with offices across the state include domestic partner insurance as a standard benefit, but they can afford to administer their own health-care plans, bearing the risk of paying out of pocket should the need arise.

Gov. Mark Warner (D)

Banning benefits may cost the state more
A Libertarian Washington think-tank, the Cato Institute, also endorsed the extension of insurance benefits to same-sex couples, decrying Virginia’s statute as “bad public policy” that actually wastes money instead of conserving it. This finding ran contrary to estimations put forth by some lawmakers, who cited domestic partner benefits as a drain on business finances and Virginia coffers.

“Many low-income Virginia residents that would otherwise have access to private health insurance paid for by a private employer are forced to go without health insurance as a net result of this regulation,” said Michael Tanner, the director of health and welfare studies at the Cato Institute. “Individuals with serious medical needs must seek federal and state-provided health care at a considerable expense to taxpayers.”

The close votes on the domestic partnership bill reflected the scrutiny legislators gave it ...