Knoxville psychologist Joshua Williams announced Wednesday he will run as a Democrat to challenge Tennessee Rep. John J. Duncan Jr. in 2018.
Williams told WBIR in Knoxville that he announced early to get voters acquainted with him.
“Constituents in the 2nd Congressional District have had 52 years to get to know Jimmy Duncan and his father, and I only have 15 months to introduce myself to the voters, so I need all the time I can get,” he said.
Duncan’s father first entered Congress in 1965 and he has held the seat since John J. Duncan Sr.’s death in 1988.
Williams cited fear and anxiety about health care as a reason for running.
“I see people living with great fear and apprehension about the changes the Senate and the Congress are about to enact. Tremendous loss of coverage in this area, which will devastate our community,” he said.
And despite running against Duncan, Williams said his candidacy is not personal.
“It’s simply a different perspective, a different outsider coming in saying ‘Maybe I can help out, too,’” he said.
The most expensive House race in history has come to a close with the Associated Press calling Georgia's 6th District race for GOP candidate Karen Handel over Democrat Jon Ossoff on Tuesday evening.
Here are the last few days of the campaign in photos as captured by Roll Call's photographer:
SANDY SPRINGS, Ga. — It’s Election Day in Georgia, so this column goes to print before we know the outcome of the 6th District special election to replace Dr. Tom Price in Congress. But whether Karen Handel, the Republican, pulls off a win or Jon Ossoff, the Democrat, manages an upset, it is well-understood here that the politics of this once solidly Republican district have changed, almost overnight.
The fact that Ossoff became so competitive, so quickly in this race was almost entirely because of Donald Trump. Trump was certainly the reason Democratic activists across the country pumped $20 million into a district where the biggest tourist attraction is a giant red chicken in front of a vintage KFC. Trump was also the reason countless Ossoff volunteers told me they were working for him “because at least it is something I could do” after Trump won in November.
Even local GOP operatives readily admitted that their problem was the president. And for the first time in nearly 40 years, Democrats in the district had a solution in the form of Ossoff, a 30-year-old former congressional staffer who may well be the prototype for a new kind of Southern Democrat to run against sitting Republicans in the New South.
While rural Democrats such as Sen. Sam Nunn and Gov. and Sen. Zell Miller once dominated Georgia and the South, Democrats were wiped out across the country in 2002 and beyond, including one of my old bosses, former Sen. Max Cleland.
I had also worked for Nunn before Cleland, and I watched over the course of my time in the Senate as Southern Democrats became fewer and fewer. People at home used to tell me they were “Sam Nunn Democrats,” meaning they were socially moderate, fiscally conservative and pro-defense. By the time Cleland lost his race in 2002, people at home wanted to know how I had become so wayward that I ended up “a liberal.”
My politics hadn’t changed, but the Democratic brand had. Instead of meaning a person was pro-business, pro-defense and socially moderate, the term “Southern Democrat” began to mean simply liberal, until it eventually meant something worse — nothing at all. I was so turned off by politics by the 2002 race, I decided to go into journalism, where at least no one would call me names. Oh, well.
As my first act of journalism, I wrote an entire book proposal titled, “Are the Yellow Dogs Done Barking?” Growing up in Georgia, people were known as “Yellow Dog Democrats,” meaning they would vote for anyone, even a yellow dog, if he had a “D” by his name on the ballot. My book would be an attempt to find out if Democrats in the South were dead as a governing party forever.
I never took my book proposal to agents in 2003 because the answer seemed so obvious at the time. Republicans had come to so dominate the South, it seemed impossible to envision a day when a Democrat could run even a competitive race statewide, or in the majority-white congressional districts that Republican legislatures had specifically drawn to stay in Republican hands for a generation.
But Ossoff’s campaign marks the first I’ve seen of what I’d call a New Southern Democrat, a different breed of Southern Democrat. But instead of a bird-hunting, Labrador version of the old Yellow Dog Democrat, Ossoff is more Labradoodle, a friendly companion well-suited to living in a (Southern) suburban condo. He’s a Yellow Dog Democrat for millennial voters, the multicultural, entrepreneurial voters who are pouring into Southern suburbs for jobs and schools and voting in a way their senior citizen neighbors never did.
Instead of running as a liberal or a conservative, Ossoff ran a different kind of campaign, tailored to the sort of majority-white, rapidly changing Southern suburban district Democrats will have to win in the future.
Instead of “Stronger Together,” the two words I heard Ossoff say most often on the campaign trail were “humble and kind.” Other than the fact that “Humble and Kind” is literally the title of a country song, it is also the message that resonated with Republican moms I met in the district, who were so bothered by President Trump’s tweeting, they compared their strategies of how they (successfully) kept their children from doing the same.
Ossoff was also very business-focused. His ads talked about how to make the Atlanta suburbs a tech corridor, and went on, at great length, about Washington wasting everybody’s money. Ironically, Ossoff didn’t hammer the president, nor did he talk about Russia. If the Hillary Clinton campaign could say the same, maybe they would all be in the White House instead of on LinkedIn.
Interestingly, Ossoff is just one of a slate of young, new Southern Democrats trying to find a way back into power. Teresa Tomlinson, the mayor of Columbus, Georgia, wrote an op-ed last week for The Daily Beast about being a “pragmatic progressive.” That answer to George W. Bush’s “compassionate conservative” respects government, works with Republicans, and, according to Tomlinson, “accepts science, technology and fact.” Snaps on that, House GOP.
One of the many criticisms of Ossoff that I’ve heard from Republican leaders in the 6th District is that he is “trying to trick people into thinking he’s a Republican.” They don’t believe what Ossoff is selling — that a person could really be pro-business and socially liberal at the same time. But that is precisely the appeal for the 10 percent of Republicans who voted for Ossoff in the April primary and put him within striking distance to win the seat Tuesday night.
To answer my question 15 years later, no, the Yellow Dogs aren’t done barking.
They don’t look like the old Southern Democrats, but the South doesn’t look the way it used to either. Whichever party figures that out will win in 2018 and beyond.
Roll Call columnist Patricia Murphy covers national politics for The Daily Beast. Previously, she was the Capitol Hill bureau chief for Politics Daily and founder and editor of Citizen Jane Politics. Follow her on Twitter @1PatriciaMurphy.
House Speaker Paul D. Ryan reaffirmed Tuesday Congressional Republicans’ intention to give the U.S. tax code a makeover. Among those listening with keen interest to Ryan’s announcement?
Taiwanese corporations and investors.
One-hundred forty Taiwanese business leaders attended the SelectUSA summit on foreign investment in the United States this week, the largest Taiwanese delegation in the summit’s history and the second-largest delegation from any nation this year.
The Taiwanese delegation spoke with state government officials and made visits to the White House and the Departments of State and Commerce to probe for information on investment incentives and changing tax structures that could facilitate Taiwanese investment here.
Many Taiwanese businesses and investors see a potential Republican tax code overhaul as a boon to their return on investment in the United States.
“In our visits to the summit and also in private visits, almost all the companies have expressed that if the [corporate] tax rate could be lowered to 15 percent that would be really ideal,” said Ho Mei-Yueh, the delegation’s leader and a national policy advisor to Taiwanese president Tsai Ing-Wen.
The “15 percent” corporate tax rate Ho mentioned was a frequent refrain on President Donald Trump’s 2016 campaign trail and the number his administration proposed to Congress in April.
Congressional Republicans, who hold majorities in both chambers, have seen their legislative agenda bogged down by internal debate over how to repeal and replace Obamacare, but Ryan said Tuesday Congress hoped to “fix this nation’s tax code, once and for all” by Thanksgiving.
The current corporate tax rate stands at 35 percent, Many business leaders in America and abroad believe it is too cumbersome and incentivizes companies to shift operations offshore, cutting American jobs.
“If we’re talking about U.S. fiscal policy … then the tax incentives that are about to be laid are of great interest to Taiwanese companies,” Ho said.
Trade and investment between the U.S. and Taiwan is robust: Taiwan was the 10th-largest U.S. trading partner in 2016, with the countries exchanging $65 billion of goods.
And the island nation of roughly 23 million people imports the seventh-largest sum of U.S. agricultural products of any country.
Taiwanese businesses and corporations have recently invested $26 billion in the U.S., concentrated mostly in the petrochemical industry, electronics, and textile manufacturing. These investments have at least partially created or sustained hundreds of thousands of U.S. jobs.
Taiwanese firms have announced an ambitious goal of pumping an additional $34 billion into the U.S., expressing particular interest in expanding investment in U.S. natural gas, according to the Taipei Economic and Cultural Representative Office in the United States (TECRO), Taiwan’s de facto embassy in Washington.
Taiwanese business leaders and administration officials met this week amid uneasy circumstances between the U.S. government and its partners and counterparts in East Asia.
Trump has taken Taiwan — a longtime friend of the U.S. but a country it does not officially recognize as independent from China — on a diplomatic seesaw ride since his election day victory last November.
On the campaign trail, Trump repeatedly blasted China for what he perceived as unfair trade practices, alleging that the country manipulated its currency to hurt U.S. businesses and had been given a pass by previous administrations on trade issues.
So it seemed a natural extension of Trump’s anti-China campaign message when shortly after his victory he accepted a congratulatory call from Tsai, the Taiwanese president, a break with U.S. foreign policy norms that marked the first such communication between leaders of the two nations since 1979.
But, not wanting to upset the Chinese government in Beijing, which views Taiwan as a province, the administration has retreated from the prospect of holding any conversations with Taiwan as North Korea has stepped up its nuclear and long range missile tests on the Korean peninsula.
Washington sees pressure from China, North Korea’s only ally in the region, as the key to undermining Pyongyang’s nuclear and long range missile programs.
Trump rejected Tsai’s suggestion in April that the two leaders speak over the phone again: Trump did not want to imperil Chinese efforts to curb the North Korean defense program by making formal overtures to Taiwan.
“Look, my problem is I have established a very good personal relationship with President Xi,” the president told Reuters in an April interview. “I really feel that he is doing everything in his power to help us with a big situation. … I wouldn’t want to be causing difficulty right now for him.”
But U.S.-Taiwanese business relations, for now, hinge more on domestic policy initiatives, like whether Republicans can hammer through corporate tax reform and change the tax rates levied on imported raw and intermediate goods.
Ryan said Tuesday that he hoped to get a Republican overhaul of the U.S. tax code completed in 2017.
“We cannot let this once-in-a-generation moment slip by,” Ryan said.
Taiwanese business leaders will be keeping a close eye on their progress, Ho indicated.
“We want to see firsthand,” she said, “what benefits or incentives that the federal government as well as some local governments could provide to the investors.”
YORK, S.C. — Just 200 miles northeast of suburban Atlanta where local and national media are trailing Democrat Jon Ossoff, South Carolina Democrat Archie Parnell — accompanied by a sitting congressman — was passing out campaign literature at a fish fry here on Saturday with just one reporter in tow.
Parnell, the nominee in the special election for the Palmetto State’s 5th District, is doing the kind of retail politicking Ossoff gets credit for in Washington, D.C. Both candidates have made voter contact — not just by phone and mail, but by handshake — a top priority.
At a canvass launch in Chamblee, Georgia, on Sunday, Ossoff told volunteers that “the eyes of the world” are on the special election in 6th District. But the same can’t be said for the nearby special election in South Carolina, where voters go to the polls the same day.
In fact, not even many eyes in Washington are on South Carolina’s 5th District.
“Who’s Archie Parnell?” responded Florida Rep. Lois Frankel, a member of the Democratic Congressional Campaign Committee’s leadership team, on Thursday when asked how she thought Parnell was doing in his special election.
Illinois Rep. Cheri Bustos, a former chairwoman of the DCCC’s Red to Blue program and a former vice chairwoman of recruitment, said she wasn’t following the race closely either.
That was a common refrain.
“I honestly have not been tracking it as closely,” Michigan Rep. Dan Kildee said last week when asked for his thoughts on South Carolina. A member of the DCCC leadership team, Kildee was fresh off the plane from Georgia, where he’d campaigned with Ossoff.
President Donald Trump carried Georgia’s 6th District by less than 2 points, which gave Democrats hope that, despite the strong historical trends there for congressional Republicans, they could turn a special election in a suburban and well-educated district into a real race. And they have, with both sides expecting a tight finish Tuesday.
Trump carried South Carolina’s 5th District much more comfortably — but not as comfortably as he did two other districts in Kansas and Montana, where Democrats narrowed GOP congressional margins to single digits in special elections earlier this year.
South Carolina has continued to earn less attention.
That’s not to say the Democratic Party has completely ignored Parnell, who’s running against former GOP state Rep. Ralph Norman, for the seat vacated by Rep. Mick Mulvaney when he became director of the Office of Management and Budget.
A Democrat held the seat as recently as six and half years ago. (John M. Spratt Jr. represented the 5th District for 14 terms.)
DNC Chairman Tom Perez and former Maryland Gov. Martin O’Malley, an erstwhile and potential future presidential candidate, have come to the district to rally with Parnell. South Carolina Rep. James E. Clyburn, the assistant Democratic leader, has been helpful, Parnell said, and Minority Leader Nancy Pelosi has donated to the campaign.
On Saturday, Ohio Rep. Tim Ryan parachuted into the district. Former South Carolina Democratic Party Chairman Jaime Harrison, now at the DNC, had connected him with Parnell and urged him to come down.
Ryan, the Rust Belt congressman best known for challenging Pelosi for Democratic leader in the House last year, and Parnell, a former Goldman Sachs adviser, met in person for the first time on a sunny field for the York Masonic Lodge Fish Fry.
Their shirt sleeves rolled up and ties drooping in the oppressive humidity, Ryan and Parnell set about meeting and greeting. Then they got in their cars and did it again, and again, and again that day, mostly stopping at events, such as the Juneteenth Celebration in Rock Hill, that targeted the district’s black voters.
Ryan cast the importance of South Carolina’s special election in national terms.
“I want you to imagine Democrats win Georgia 6 and South Carolina 5,” he told a room of canvassers. “There’s no way the Senate takes up repealing Obamacare if Archie wins this race.”
But the money spent in South Carolina has been nowhere near the amount spent in Georgia.
The DCCC has invested $275,000 into the Palmetto State, mostly through the state party, to experiment with different get-out-the-vote and messaging efforts targeted at African-Americans.
The African-American base is key for any Democratic success here. Unlike Ossoff, Parnell doesn’t shy away from party labels: the blue campaign pamphlets he passed out Saturday spelled out “DEMOCRAT” in big yellow letters.
The National Republican Congressional Committee has spent about $100,000 on a coordinated TV ad with Norman. The Congressional Leadership Fund, the GOP super PAC backed by House leadership, made a late $50,000 investment in live calls targeting low-turnout GOP voters.
Democrats in the district say this election feels different from previous contests, even from last year’s when Fran Person, a onetime aide to former Vice President Joseph R. Biden Jr., challenged Mulvaney and was included on the DCCC’s Red to Blue list.
Darlene Mansfield, a 64-year-old Democrat who helped with Person’s race and is now helping Parnell, said Parnell has put more of a focus on engaging voters directly at small gatherings.
Internal polling had Parnell down 10 points in late May, which meant he had narrowed the gap with Norman by 6 points since his quirky TV ads started running in March. On screen, Parnell embraces the geeky tax lawyer he is and invokes “House of Cards,” the hit Netflix series whose fictional protagonist is a congressman from the same district.
Even Norman, who’s favored to win on Tuesday, isn’t expecting to cruise to re-election in 2018. “I expect this district will be competitive from here on out,” he said Saturday morning.
So why hasn’t Parnell caught on more, nationally?
The fact that his election takes place the same day as Ossoff’s doesn’t help.
South Carolina “got squeezed out of the public consciousness,” said Zac McCrary of Anzalone Liszt Grove Research, the polling firm working for Parnell.
But for some Democrats, Parnell’s background may be one reason he hasn’t sparked the same enthusiasm.
“Part of what we’re seeing is a Democratic base that is not ready to pound the pavement for a Goldman Sachs banker,” said one Democratic operative. It’s also a big reason Parnell hasn’t been able to tap into the same liberal fundraising base that boosted Ossoff and Rob Quist in Montana, said a Democrat familiar with the race.
Others, including Ryan, disagree.
“His background has some appeal for moderate Democrats, independents, maybe even some moderate Republicans,” said the Ohio congressman, who was dispatched as Parnell’s surrogate to a candidate forum at a country club before a heavily GOP audience.
Neither candidate in Georgia wants to talk much about the president. That’s not the case in South Carolina. Parnell’s fundraising emails refer to Norman as a “Trump clone.”
Norman only had praise for Trump, who recorded a robocall over the weekend urging voters in the district to “vote Republican.” He followed up with a supportive tweet Monday.
The GOP nominee sticks to traditional conservative talking points about the military, abortion, Second Amendment rights and term limits. He said he loves campaigning, speaking with the confidence of a man who’s been planning on running for Congress for years. Republicans expected Mulvaney would run for governor eventually; his tapping for the OMB by the Trump administration just expedited Norman’s timeline.
Norman has said he’d like to join the House Freedom Caucus, of which Mulvaney was a co-founder.
“I want to set up constituent service as Mick Mulvaney has done,” Norman told the country-club crowd.
“God gave me one mouth and two ears,” he said. “I intend to listen when I get to Congress.”
Parnell criticizes Norman’s “self-interest” and lack of compassion in his policy positions, and doesn’t lose a chance to point out how many debates his GOP opponent has skipped.
Even many Republican voters said they associate Norman, a polished politician, with the country-club set. House Speaker Pro Tempore Tommy Pope, who lost last month’s GOP primary runoff to Norman by just 200 votes, was more of the local guy — a “have-not,” as one local Democratic activist put it.
Some Democrats in the district believe Pope supporters may vote for Parnell, if only so that Pope can have another shot at running for the seat in 2018.
Assembling with a group of black voters for a “Souls to the Polls” march on Saturday, Parnell stepped out of line for a moment to run to a nearby garbage can. He’d spotted a screw in the parking lot and was afraid it would puncture someone’s tire.
Parnell is intensely pragmatic and earnest — and not at all a natural politician.
Everyone needs a coach. Parnell’s is Terrence Culbreath, a hulking African-American man who, at 34, is the youngest mayor in South Carolina.
“Did you learn anything from watching Ryan?” Culbreath chided Parnell as they were leaving the fish fry in York. The eight-term Ohio congressman had quickly removed his Ray-Bans and moved in on the crowd, gnawing on a fish sandwich while asking people how old their grandchildren were.
“He’s better than I am. But I’m learning,” Parnell said.
Voters could vote absentee this past weekend if they met certain criteria. As a woman walked out of the polling place in York, she told Parnell, “I hope you win.”
“Thank you, ma’am,” Parnell said. “We will win. We will.”
“That’s a good sign,” he said after she had walked away. “I’m getting goose bumps again.”
JUNEAU, Alaska — It’s hard to get excited about a health insurance premium spike.
But for Lori Wing-Heier, Alaska’s blunt but friendly state insurance commissioner, the decision by the state’s Blue Cross Blue Shield plan to raise its rates by just 7 percent was a moment of joy.
“I was just so relieved,” she recalled, smiling, in an office overlooking the tiny sliver of a town that serves as the largest state’s capital.
That 7 percent increase — finalized last August — was the first sign that her plan had worked. After a grueling slog with a state legislature of reluctant Republicans throughout the spring, Wing-Heier had put in place a program designed to prevent Alaska’s only remaining Obamacare insurer from raising its rates a whopping 42 percent, one of the highest projected hikes in the country.
At a time when nearly every state was seeing their Obamacare rates jump, some by 20, 30, even 50 percent before subsidies lowered consumers’ costs, Alaska kept its spike in check. Its health insurance costs are already the highest in the nation.
Suddenly Wing-Heier — whose lilting accent at least subtly resembles Sarah Palin’s — became the most popular insurance commissioner in the country. The Obama administration openly praised her plan, a surprise for a red state. Then the incoming Trump transition team did, too — a rare area of bipartisan agreement on not just health care policy, but on the controversial law known as Obamacare, the Affordable Care Act. Policy experts, too, have lauded Alaska as the first state to “fix” the health care law.
Commissioners across the country asked for the details of her success. Minnesota and Idaho set up similar programs, and policymakers in Maine introduced legislation modeled on the idea. Other states like California, New Hampshire, Ohio and Oklahoma are eyeing the program for 2019 and later.
It seems like a simple solution based on the concept of reinsurance, transferring a portion of risk to another entity. The program really did reduce consumers’ expected premiums, which are at the center of so many complaints over the health law. The idea isn’t nakedly partisan, like so many other health proposals, and doesn’t alienate the hospitals, doctors or insurance companies that often fight changes to their business models.
It comes with an even more attractive twist, too: the federal government might be persuaded to pick up some of the tab.
But the real story is more complicated — and portends the arduous path the program would face in any other state weighing the idea.
Alaska not only had a unique need for the program thanks to its outlandishly high premiums, but it also had the budget reserves to fund it without making any cuts or adding any taxes.
It should have been easy — or at least easier here than anywhere else. But interviews with dozens of state lawmakers and industry officials show that the path was anything but. This isn’t an Affordable Care Act “fix” that will breeze through state capitals, regardless of its merits.
Nor is it clear, in the end, that the program is a true remedy to the price hikes that have alienated so many Americans. In many ways, the program is a limited, stopgap solution to the underlying issue plaguing American health care: high costs. It does lower premiums, but only by throwing more federal and state funds toward the problem.
Alaska’s experience serves as a lesson not only for other states considering the same solution, but for congressional Republicans, who are mulling a similar idea in their own efforts to repeal and replace the 2010 law. At the outset, the House Republican bill may not contain as much funding as needed to replicate the success of Alaska’s program — and the costs will only grow over time.
Alaska isn’t known for policy experimentation. But Wing-Heier embarked on her rescue mission because she had no choice. Like just about everything else in Alaska, health care costs in the Frontier State are bigger. In this case, the costs are orders of magnitude higher than those in the Lower 48.
Alaska — a state with a geography so vast that people keep float planes docked behind their waterfront homes instead of motorboats — faces the same dynamics that have driven up insurance costs and reduced insurer competition in a host of other rural areas. It sees limited provider competition and a small population to share costs. It just feels them that much more acutely.
In some ways, Alaska goes beyond “rural.” Even New Hampshire has more miles of road than Alaska, despite its immense size. Many homes are accessible only by snowmobile or ATV, depending on the time of year. Anchorage, the most cosmopolitan city, boasts a population of just 300,000, and moose still share the streets with cars.
“Alaska’s always the crack at the end of the whip,” says state Sen. John Coghill, a long-serving Republican from the Fairbanks area. “Everything has an exponential effect up here.”
Alaska’s insurance premiums are no different — they dwarf those in any other state. In Anchorage, the average benchmark plan this year costs $904 per month before subsidies. The next highest city is Charlotte, N.C., where costs are $572 per month. The national average hovers around $361 per month.
The differences are most pronounced for older Americans like Ray Jakubczak, a gregarious, 55-year-old biologist who delights in the Alaskan suburb, Eagle River, he calls home.
Jakubczak and his wife will pay a staggering $31,908 for their health insurance this year — before they ever set foot in a doctor’s office. They shell out $2,659 per month in premiums — plus a $5,250 deductible for any care they need.
It’s more than any other expense in their budget. Now, despite his deep love for his mountain views and his local coffee shop, he’s thinking about moving south.
“You wouldn’t think that if you plan and budget responsibly, and you have a 20-plus-year professional career, it’s going to be so high as to drive you out of state. But more than $30,000 a year? And you can’t even use it, because the deductibles are so high,” he lamented on a recent drive through the mountains where he and his wife built their home 17 years ago.
The Jakubczaks’ bill is high, even for Alaska. Their financial pain is particularly acute because they make too much to qualify for the health care law’s subsidies for people who earn up to four times the poverty level.
Enter Wing-Heier, with a plan to bring down those sky-high health insurance costs, or at least to keep them from spiking again: the wonky idea of reinsurance.
The concept is based on the basic premise of insurance: healthy people paying into the system will help offset the costs of any sick people. A reinsurance program relies on a separate pool of money to fund the care for some of the sickest people in the group — effectively lowering the prices everyone else must pay.
Under Alaska’s program, people who suffer from 33 relatively expensive conditions, like end-stage renal disease, hemophilia or cerebral palsy, would still buy their plan from the state’s Blue Cross plan, Premera, and pay the same premiums as anyone else who relies on HealthCare.gov. But behind the scenes, their health care claims would be paid out of a $55 million state pool of reinsurance money, rather than Premera’s own funds.
The program is aimed directly at reducing costs for people like Jakubczak and his wife — relatively healthy people who face especially high premiums, because they are older or too wealthy to qualify for subsidies, or both — and who are bearing costs for sicker, more expensive enrollees.
The tactic works especially well in small markets like Alaska’s, where just shy of 20,000 people buy their insurance through HealthCare.gov, compared to more than 1 million each in states like California or Texas. The District of Columbia alone has enrolled more people than the entire Frontier State. Any especially expensive health care service — like cancer or multiple sclerosis treatment — is shared by far fewer individuals.
Jakubczak didn’t know about the reinsurance program, but it actually saved him almost $10,000 this year. Without it, his $2,659 premiums could have topped $3,500 per month.
People like Jakubczak — who face sky-high rates with little benefit — exist all across the country. That commonality makes reinsurance an attractive option. So does its simplicity. Throwing more money at a targeted problem is easier than rewriting the entire health care policy landscape, especially when changes to the system necessarily create some winners and losers. Reinsurance, at least on its face, doesn’t.
But as Alaska’s experience shows, even a straightforward reinsurance program can be a brutally punishing policymaking effort for a state legislature.
The idea came to them last April, in a Friday night emergency meeting in a cramped office of Alaska’s small but stately Capitol building, just as the sun was setting behind Mt. Juneau, the towering seaside peak that looms over the tiny town.
Wing-Heier was nearly hopeless, she remembers. She’d logged meeting after meeting in the Capitol, where three or four staffers essentially play Tetris to jam their desks, filing cabinets and mini-fridges in spaces meant for one.
The lawmakers were beginning to grasp the severity of the potential 42 percent premium spike and what it would mean for the people who rely on those health plans. There were already signs that the other insurer in Alaska’s Obamacare market, Moda, would soon drop out. It did, later that spring, leaving only Premera Blue Cross Blue Shield and its massive requested increase.
But as she pitched her plan, Wing-Heier was running into a wall of resistance from the Teamsters Union and other employers, which were sending email blasts of opposition and logging their own meetings to push against the proposal.
Their central issue: Wing-Heier and her closest Capitol ally, Republican Rep. Kurt Olson, a former insurance broker, wanted to finance their program by hiking taxes on all the insurance plans in the state, including employer plans. Those plans and their lobbyists saw it as a new $20 per member monthly tax, and they weren’t having it.
“I felt like we’d lost,” Wing-Heier remembers. “We’d given it our all . . . but we were running out of options.”
So Wing-Heier and Olson huddled with their closest staffers late that Friday, brainstorming other funding mechanisms. They tossed out ideas until Olson alighted on a solution: The department could use the revenue it was already bringing into the state’s general fund. Alaska already required insurers — including health, auto and homeowners’ insurers — to pay a 2.7 percent tax. It wasn’t being used for a specific project — meaning they might be able to tap into it without alienating any other industry with a “cut.” No new taxes, no cuts to programs: It was a win for everyone.
“It was our breakthrough moment,” she says.
That breakthrough helped reinvigorate Wing-Heier and Olson’s legislative push and get the bill to the governor’s desk.
But other states might not have a pair of such dogged insurance wonks leading the charge. And they almost certainly won’t be able to stumble on a pool of money to bankroll the program, the way Wing-Heier and Olson did.
“There’s definitely a lot of interest in other states, but almost every time, you get hung up when you mention that the funding has to come from somewhere, like a tax on all premiums,” says Joel Ario, a former Health and Human Services Department official and Manatt Health consultant who helped other states consider reinsurance programs. “It’s hard to make that work. It’s hard for a lot of people to get beyond that.”
Indeed, states are seeking different combinations of financing mechanisms, mostly to minimize the pain on their industries. Minnesota’s plan, for example, is funded by a combination of the state’s budget reserves and a 2 percent medical provider tax — not a tax on premiums in the state.
Red states like Alaska, where the health care law remains decidedly unpopular, will have further partisan obstacles to overcome.
Wing-Heier and Olson had to convince a legislature that had just months before sued its own governor over his effort to expand Medicaid under the health care law. Former Democratic Sen. Mark Begich lost his seat in Congress partially because of his vote for the law; he was defeated in 2014 by Republican Dan Sullivan, who vowed to repeal it. That same dynamic plays out across the country.
The even bigger challenge in Alaska, according to dozens of state lawmakers: convincing the legislature to divert the $55 million the program would require in the middle of one of the state’s worst budget crises. The legislature was trying to salvage a $3 billion hole in the state budget, a result of declining oil revenues — bad news for a state that’s so dependent on the industry that its people drop casual references to the current price of a barrel, even in bar stool conversations.
The same budget gaps have been bedeviling state legislatures across the country for years. Indeed, Alaska has it easier than most because of its storied oil revenues, which have insulated residents even from an income tax for most of the state’s history.
In the end, the costs pushed Alaska’s legislature over the edge.
“We knew in my office it had to be done,” says state Sen. Mia Costello, a Republican and one of the bill’s sponsors. “There was a lot of trust that the [Department of Insurance] wouldn’t call it a crisis unless it was one.”
Once they convinced lawmakers they could avert that crisis, the path to passage was relatively simple.
Premera filed its first rates in July, about a month later after enactment, and Wing-Heier breathed her sigh of relief: their 7 percent increase was less than they’d expected. The program launched in January, and paid about $5 million worth of claims in the first quarter of this year.
That sigh of relief isn’t the only thing that’s making other insurance commissioners jealous. Wing-Heier, at the encouragement of former Centers for Medicare and Medicaid Services Administrator Andy Slavitt, found a way to fund most of the program, at least after its first two years, with a lot of federal help.
The plan centers on a waiver Alaska is requesting from the Trump administration. At its heart is a simple idea: If premiums had gone up 42 percent, the subsidies the government pays to keep coverage affordable for low-income Alaskans under the health care law would have risen, too. Since the state saved the federal government millions, it wants a portion of those funds back. It’s a big portion: Alaska is asking for about $49 million in 2018 alone. By 2022, they expect to get back $66 million.
Despite that price tag, every indication from both federal and state officials suggests that the waiver will be approved as early as this month, ahead of a mid-July deadline.
Late in May, the Trump administration even released a checklist to help speed the process for states interested in pursuing a similar option.
Other states are taking notice. Both Ario, the Manatt Health consultant, and Wing-Heier, who’s been bombarded with questions from fellow commissioners, predict scores of other states will pursue the waiver if Alaska’s gets approved.
“A lot of states want to see it get approved before they move forward themselves,” Ario suggested. He’s heard of interest in states as diverse as California, New Hampshire, New York, Ohio and Oregon.
Developing and implementing the program, however, will require the same grueling fight that nearly knocked out Alaska’s, including the partisanship, the lobbying lift and the budgetary brawls.
“States are saying, we don’t have the money up front,” Wing-Heier admits. “Here in Alaska, we funded the first year so we could show the savings. But other states are saying, we don’t have the money like Alaska did.”
The so-called 1332 waiver makes the program more attractive, but the path forward for reinsurance remains uncertain at best. That’s true everywhere — even in Alaska.
To start, the federal waiver won’t pay for everything. The costs associated with the program are expected to continue to increase — and Alaska will have to keep upping its own contributions. Granted, their contribution is less than it is now: If the feds “pass through” as much funding as Alaska has requested, the state contribution will be $11 million in 2018, up to $14 million in 2022.
But lawmakers caution that oil prices are not rising, and the state’s finances are not improving. Appropriating that money will not be easy in a state that “usually fights over hundreds and thousands of dollars, let alone millions,” as one state House Republican put it.
“We initially thought it was one year. We found out it’s not,” says Sen. Mike Dunleavy, a conservative from Wasilla who was among the few to vote against the package and the latest budget. “If they give us the funds . . . we still, every year, in the best-case scenario, every year we’re going to be adding $11 million, $12 million, $14 million. . . . This is not fixing the problem. This is managing the problem.”
Adding insult to that funding request was a bombshell from insurer Premera. Despite executives’ warnings it would leave Alaska’s market entirely without the reinsurance program, Premera actually made an $18 million profit in Alaska in 2016. That was partly because of federal payments it hadn’t been expecting and partly because of a 2015 claims estimation error. Nevertheless, the profit makes legislators much less willing to help buy down high premiums in the future, they suggested in interviews.
The future funding challenges could be even tougher elsewhere. States that don’t get a federal subsidy as high as Alaska’s — which is every state — also would see far less money come in through a similarly designed 1332 waiver, according to Oliver Wyman actuaries. That might leave them facing an even bigger responsibility for the costs.
There’s a reason the costs of a program like reinsurance keep going up and the contributions from both the federal and state governments must increase. In fact, it’s much the same reason health insurance costs continue escalating: Health care costs in the United States keep rising.
Alaska’s program doesn’t change that. It simply blunts the impact of the price increases by throwing more money at the problem.
Health care expenditures have grown by a little more than 5 percent annually in recent years — an increase that gets baked into every premium increase, whether you buy your insurance on the health law’s exchanges or through your employer.
It’s why Dunleavy, scribbling furiously at the whiteboard in his Juneau office, was so upset about the reinsurance program. He says it doesn’t solve the real problem of high costs.
While reinsurance spreads the costs of the sickest, it’s still asking someone to pay up for those sicker customers, either through their tax bill, their auto-insurance bill or some other charge. And it leads to the question: Should they have to pay?
It’s the main reason that Sen. Anna MacKinnon, a no-nonsense Republican from Eagle River area, led the successful drive to add a provision to the program that requires the state to help manage the care of any high-cost individuals with hemophilia or other diseases that qualify for reinsurance payments.
MacKinnon, left, listens to fellow state Sen. Mia Costello during a 2016 session in the Alaska Capitol. (Rashah McChesney/AP) “Can we work with these individuals to make sure they stay healthy, so we don’t find them in expensive situations where they’re receiving emergency care?” she asks. “What can we do to help them have more personal responsibility?”
“We don’t want people to not have access to health care, but at the same time, you have to look at the cost of it for the state of Alaska,” MacKinnon adds.
Adding to the difficult path ahead in any state are congressional Republicans’ efforts to repeal and replace the 2010 law that set up the insurance markets and established tax credits for premiums.
The House Republican bill that passed in May would shift away from a credit based on the cost of a person’s monthly premium — relying instead on a credit based on age and income alone. Alaska’s waiver, which depends on the federal “savings” the reinsurance program achieves, would be defunct: The reinsurance program would no longer be “saving” the federal government any money since the credits wouldn’t cost less if premiums came down — making it a much less attractive or reliable funding mechanism. There are no immediate plans to keep the funding structure that enables Alaska’s waiver in the Senate version of the bill.
House Republicans in D.C. have what they say is a simple solution: They’ve included in their bill federal money that many expect would be used for reinsurance programs like Alaska’s. The package ultimately includes about $100 billion over 10 years that will likely be used for state-based reinsurance programs, and another $15 billion for nine years’ worth of a federal reinsurance program.
It’s not clear, however, that those funds will indeed be used for reinsurance. They could be used for costlier high-risk pool programs or other changes; the language is vague.
Nor is it clear that even those amounts will be enough to support programs like Alaska’s in all 50 states, given the package’s other massive changes to the structure of existing tax credits and its changes to the Medicaid program.
Alaska’s program alone costs about $55 million per year to implement — and while costs are higher than in other states, there are far fewer enrollees in the program than elsewhere. Minnesota’s copycat program is expected to cost two to three times as much, about $542 million for two years, and its program is contingent on receiving a 1332 waiver.
“Under the House bill, the tax credits are wholly inadequate, so there’s not enough reinsurance money allocated to solve the problems. You’re just going to see massive amounts of people without insurance,” says Slavitt, who directed CMS under President Barack Obama. “Unless a state is willing to come up with multiples of the amount of money that Alaska came up with, it’s not going to be possible.”
Even Alaska might have to come up with multiples of the amount of money it’s relying on now. The Republican plan would ask them to pay half of the reinsurance costs by 2024 — a far bigger percentage than they’re hoping to pay under the current program.
Wing-Heier points to actuarial calculations that show Alaska would ultimately receive millions less for its reinsurance program under the House bill than under existing law.
So now Wing-Heier is doing exactly what she did when she was staring down that 42 percent rate hike: crunching the numbers, and preparing to make her case that the House bill’s funding is inadequate.
This time, though, she’s taking her fiery persistence to Capitol Hill in Washington. “Right now, based on medical trends, it’s not going to work,” she says. “But it’s certainly something we’re bringing up with our delegation.”
Erin Mershon produced this special report as part of a yearlong Reporting Fellowship on Health Care Performance sponsored by the Association of Health Care Journalists and supported by The Commonwealth Fund.