Fearless VT, Fearful TN

by Martin Harris

It’s instructive to compare the different reactions of two States –one anciently “red” in political philosophy, recently turned “blue”, and one historically blue, recently turned red– to one of the many government-in-health-care questions recently forced on all States by the Affordable Care Act. After passage a year ago, we’re now finding out what’s in ACA, and one of those findings is that every State must decide whether to set up a Health Care Exchange to enable citizens presently uninsured to purchase a policy: all new HIX’s will enroll all interested insurers under the same set of coverage rules, and (we’re not told how) set prices to enable “guaranteed issue” and prevent de-selection of applicants with pre-existing health problems. Effectively, it’s an attempt to enlarge MedicAid (the low-income supplement to regular MediCare) and achieve broader coverage at the State level. States which comply will get a steep Federal cash bonus for a few years, then Progressively (pun intended) less as they must then spend and therefore tax more to cover the new costs locally: States which don’t, won’t get the initial enticement; they are free to adopt their own HIX under ACA rules supposed to push the US towards universal coverage, partially via getting 16 million more people into MedicAid. As of this writing, 17 States (mostly blue) and DC are in, 13 States (mostly red) are out, and 20 are undecided. Now reliably-blue Vermont is in (with its own slightly different version), and reliably-red Tennessee is out.

That’s partially because TN has been down this road before, with its creation of TennCare a score of years ago, when the State was still politically blue (although the more conservative “blue-dog” label was more accurate) but that in-State MedicAid experiment swiftly showed unacceptable upward cost curves, had to cut enrollment and coverage back sharply, and led to widespread Democrat electoral de-fenestration at the State House and Governor’s office. VT ran no comparable in-State initiative, even though the State was already less conservative: in 1992, for example Senator Leahy (D) had won a fourth term, defeating challenger Douglas (R) 54 to 43%. Now, the VT-TN comparison is illustrated statistically in the public-spending per capita numbers for 2010: VT, at $2245, was third in the nation, behind only #1 NY at $2559 and #2 AK at $2534. The US average was $1499. TN spent $1582 , for a #16 ranking. There is anecdotal evidence that VT’s welfare spending level illustrates its “welfare-magnet” label (arguable but unproveable) and there are actual quotes from TN Guv Haslam over the fear that Medicaid-eligible residents now in adjacent Deep South States which have already rejected the HIX concept would be attracted north to enroll: “every day we find out that our numbers [would be] impacted.” These contrasting attitudes toward the “voters-for-stuff” electoral cohort which would benefit from an in-State HIX –VT welcoming, TN not– coincide with the underlying political ideologies: the Progressive enthusiasm for the ever-expanding programs and budgets of the technocratic-administrative state, the Conservative enthusiasm for limited government and individual responsibility. Regarding an in-State HIX, VT is fearless, valuing an increase in grateful voters over an increase in costs; TN is fearful for the opposite reason. As you might expect, TN is pursuing a third way: encouraging insurers and providers to invent and deploy a private-sector, internally-competitive, lower-cost alternative to the no-innovation/no-competition/ no-variation Federal HIX model. Three examples: 1. a private-sector TN HIX might contain (as the ACA HIX model doesn’t) a variable-cost provision, with insurers charging less to cover applicants who present with body-mass index under control, nicotine use at zero, and similar measurable customer-determined health choices all on the good side. “Community rating” such as VT has already forced on insurers via regulation requires markedly different actuarial (and therefore cost) risks to be ignored in favor of uniform premiums; a variable-cost alternative would be invaluable for incentive-based cost management and for nationwide demonstration purposes. Not that it’s terra incognita; such corporations as Safeway have used it for decades. 2. A private-sector TN HIX might offer health-savings accounts as a subscriber option. With no income tax, TN can’t offer an income tax deduction for HSA deposits, but there are other tax-abatement ways to reward such investments. 3. A private-sector TN HIX might incorporate the already-in-place MediCare Advantage concept, whereby a subscriber can contract with a private company for a broader range of services using his MediCare entitlement as premium-basis; some MCA insurers charge an extra premium, some don’t. As with MedicAid, the HIX would serve as clearing-house for subscriber choice. None of these coverage elements is permissible under the Federal semi-mandate /semi-bribe to accept its standardized design for a State HIX program, as VT already has and TN (and other Appalachian States) already haven’t.

That’s the exact opposite of what they did in the Great-Depression decade, when then-red Vermont rejected a “Green Mountain Parkway” scenic highway offering, while the then-blue States selected by the Feds for a “Blue Ridge Parkway” willingly agreed, even though the mountaineers actually dispossessed, resisted and were then driven off their lands by military force. Like the clearing of NYC’s Central Park acreage, evicting suddenly-unwanted mini-farmers by State militia for an 1857 grand opening, it’s an aspect of government force used by those who claim they know better which happens frequently (think the recent Kelo example, New London home-owner evictions for a commercial project which then evaporated) while the downsides are equally-frequently wiped as much as possible from acceptable histories. But such histories can’t be entirely sanitized: here in Appalachia, there are still occasional newspaper accounts of the governmental rifle-and-torch evictions of the hill-folk hindering Progressive wisdom, a pre-Interstate no-commercial-purpose limited-access highway intended solely for urbanites with sufficient discretionary time and money to afford a touring car (Chevrolet offered such as a 1931 Sports Cabriolet and a 1936 Pegasus Sports Coupe) and enjoy it, at a time when farmers were driving “Hoover-wagons”, pick-up trucks drawn by horses to avoid fuel costs.

Enough of such history remains that modern Progressives are apprehensive, which explains why there are relatively fewer mandates (think the swift retreat on their prized assault-rifle ban) and relatively more incentives: think the options offered States in the contexts of education, within No Child Left Behind, and health care, within the Health Care Exchange accept-or-reject menu. The brightest people in the room (just ask them) have learned: to avoid outright and humiliating Nullification, offer options and bribes. Fearless States will accept, fearful ones won’t.