Saturday, May 13, 2017

California and Kentucky - A tale of two states
  From Sen. Henry Clay's Compromise of
  1850 to Obama's Affordable Care Act

Californians and Kentuckians have one truth in common - neither State shares a cultural identity with another state based on political history. But Californians and Kentuckians have common interests that were in the spotlight in the last seven days.

One is the close relationship between some folks in Cupertino, California, and folks in Harrodsburg, Kentucky - specifically at Apple's headquarters in Silicon Valley and at Corning's glass plant in Kentucky.

Jeff Williams, Apple’s chief operating officer, explained to a group of Corning employees on the plant floor Friday that the iPhone originally had plastic on the surface, but when Steve Jobs showed a prototype on the stage in 2007, he kept it in his pocket and by the end of the day the surface was covered with scratches.

Jobs decided that the phone, which was to be released in six months, had to have a glass surface. Every time Apple had tested the iPhone with glass, the glass broke when they dropped it. Shatter resistant glass existed only in Corning's lab. But Corning scrambled and the Harrodsburg plant has been making the Gorilla Glass for iPhones ever since.

Apple announced Friday that it plans to invest $200 million in the Corning Gorilla Glass plant in Harrodsburg. The money will come from Apple’s new Advanced Manufacturing Fund, which the company says will invest $1 billion with U.S.-based companies to develop innovative production and skilled jobs.

The previous Saturday was the 143rd running of the Kentucky Derby as noted in newspapers here in the Northern California Redwoods where we celebrate Seabiscuit. This tie to Kentucky goes much further back than 10 years ago. Seabiscuit was foaled in Lexington, Kentucky, on May 23, 1933 and grew up on Claiborne Farm in Paris, Kentucky, where he was trained.

California and Kentucky share some history that goes beyond horse racing. California became a state in 1850 because of Kentuckian Henry Clay.

Tensions between the North and South over the issue of slavery were high in the 1840's. By 1850, after the Mexican-American War, how to handle the former Mexican territory occupied by the United States placed a critical strain.

The Compromise of 1850 was formally proposed by Clay, then a Senator from Kentucky, and guided to passage by Senator Stephen A. Douglas, Democrat of Illinois, over Northern Whig and Southern Democrat opposition. It was enacted September 1850:
  1. California was admitted as a free state;
  2. Utah Territory and New Mexico Territory were organized with slavery to be decided by popular sovereignty;
  3. Texas dropped its claim to land north of the 32nd parallel north and west of the 103rd meridian west in favor of New Mexico Territory, and north of the 36°30' parallel north and east of the 103rd meridian west which became unorganized territory. Texas's boundaries were set at their present form. Senator James Pearce of Maryland drafted the final proposal where Texas ceded its claims to land which later became half of present-day New Mexico, a third of Colorado, and small portions of Kansas, Oklahoma, and Wyoming to the federal government, in return for the assumption of $10 million of the old republic's debt. El Paso, where Texas had established county government, was left in Texas;
  4. Slave trade was abolished in Washington, D.C. (but not slavery itself);
  5. The Fugitive Slave Act was strengthened.
Of particular concern was California and its gold.

I would guess that fewer than one-in-a-hundred-thousand of persons raised in California know about Henry Clay and the Compromise of 1850. Unfortunately, the in-depth teaching of American History in public schools has not been a priority in California where creating student self-involvement was once prioritized under the euphemism "self-esteem."

A failure to understand each other because of a lack of awareness of how historical context alters culture is significant in the United States.  The history is reflected in the differences in the populations. Compare California's racial/ethnic makeup...

to Kentucky's....
Kentucky's population is 85% non-Hispanic White and 8% non-Hispanic Black, which totals to 93% of the population. California is 39% Hispanic and 14% Asian which total to 53% of the population, while 38% of the population is non-Hispanic White and 6% non-Hispanic Black which total to 44% of the population.

It is almost as if the two states have no history in common. And except for Henry Clay having an important role in their histories, they don't have any important cultural history in common.

As I've explained elsewhere, California was a Spanish colony/Mexican territory from the late 1500's to 1849. On the other hand, Kentucky was part of the British colony/U.S. State of Virginia during that 300 year period. Kentucky has no sea coastline but has the most navigable miles of water in the lower 48 states and is the only U.S. state to have a continuous border of rivers running along three of its sides. California is on the Pacific Rim with 3,427 miles of measured coastline.

These different States embraced he Affordable Care Act  ("ObamaCare") but are now responding to the very knotty public policy problem that (1) it requires additional subsidies by the state government and (2) Congress may replace it.

Both the State of California and the State of Kentucky jumped into program enthusiastically. Despite that fact that in 2013 Senate Republican leader Mitch McConnell from Kentucky railed against the Affordable Care Act, calling it a “catastrophic failure” for people everywhere, Kentucky's then Democratic Governor Steve Beshear responded: “I have a U.S. senator who keeps saying Kentuckians don’t want this. Well, the facts don’t prove that out."

In Kentucky, more than 400,000 people gained health insurance through the program, with the highest growth rate of Medicaid coverage of any state.

In late 2013, as McConnell pointed out, it was learned that about 280,000 Kentuckians would have to give up their existing insurance policies and enroll in alternatives that comply with the federal Affordable Care Act. Kentucky Department of Insurance spokeswoman Ronda Sloan said individual policies for about 130,000 people would be discontinued, as would small group policies for about 150,000 more.

Beshear’s successor, Republican Governor Bevin, was elected in 2015 on a promise to repeal and replace the healthcare law on the view that thousands of Kentuckians had unaffordable premiums and only one health insurer to choose from.

Bevin explained: “We want this to be a helping hand for people at a time when they need it, but then be able to return to the commercial marketplace.” Last year, Bevin submitted the waiver to restrict Medicaid eligibility by requiring enrollees to work or volunteer at least 20 hours per week and to pay monthly premiums based on income.

In an ideologically Neoliberal proposal Bevin's plan would take away from Medicaid recipients most eye care and dental benefits but then allow recipients to earn them back based on this chart:

Californians, on the other hand, now have Socialist Vermont Senator Bernie Sanders telling us "Please make my life easier. The great state of California can send a message that will be heard all over this country and all over the world if you pass single-payer here.” (He doesn't tell anyone that in Vermont the Governor and the Legislature are locked in battle because under the Affordable Care Act, virtually all teacher health insurance plans must be re-done to start a new plan on January 1, 2018. But hey, nobody cares that Bernie is politically useless in his home state when it comes to solving problems.)

Indeed the "great state of California" is looking at Senate Bill 562, the Healthy California Act, which for all Californians would cover all medical care, including inpatient, outpatient, emergency care, dental, vision, mental health, nursing home care, eliminate co-pays, insurance deductibles and allow Californians to choose their doctor plus referrals would not be required. (It's tempting to say that also for anyone who loses a tooth, regardless of age a State tooth fairy will leave $1,000 under your pillow....)

A nine-member unpaid board appointed by the governor and Legislature would oversee the health system. An advisory committee, consisting of doctors, nurses, consumers and other health care providers, also would guide public policy.

The state would seek waivers from the federal government for Medi-Cal (Medicaid), the Children’s Health Insurance Program, Medicare, and the Patient Protection and Affordable Care Act to offset the cost of the program. But how to pay the substantive balance of the cost has yet to be proposed.

The last California single-payer proposal was introduced in 2007. Estimates indicated it would have cost the state $209.8 billion rising to as much as $252 billion in 2015, according a fiscal analysis by the Legislative Analyst’s Office. The plan included an 8% wage tax on employers and 4% on employees. Based on now known medical care cost increases since 2007, the tax for that plan would have to have been raised substantially, probably some number like 12% on both employers and employees. And the plan was not as comprehensive as the new proposal. It was vetoed by then Republican Governor Arnold Schwarzenegger.

Democratic Governor Jerry Brown when in Washington lobbying about the billions his state could lose on the eve of the House Republican vote to repeal and replace Obamacare said regarding SB562: “Where do you get the extra money? This is the whole question. I don’t even get ... how do you do that? This is called ‘the unknown by means of the more unknown.' In other words, you take a problem, and say ‘I am going to solve it by something that’s ... a bigger problem,’ which makes no sense.”

The reality is that Social Security and Medicare are mostly funded by taxes on wages, partly paid by employers and by employees. Make no mistake about it, any single-payer plan in California will require additional such taxes. And no it won't come from "the rich" as California already has a billionaire-income-tax supporting its deficit budget in a significant amount.

It is a deficit budget, worse than expected as Brown’s administration miscalculated costs for Medi-Cal by $1.9 billion in the 2016-17 budget. The Democratic governor called for more than $3 billion in budget cuts in 2017-18 because of a projected deficit he pegged at $1.6 billion for that year. The massive hole in the Medi-Cal budget surprised state lawmakers.

Since it is likely that California will see reductions in federal support for Medi-Cal within the next few years, it's going to be interesting to watch "liberal" Californian's deal with taxes. Because in 2017 the Democrats controlled 's of the votes in both houses of the Legislature, a very large gasoline tax increase was approved to do badly needed road maintenance. Now a ballot measure has been proposed to have the voters repeal the gas tax increase.

Without a 's vote in each house of the Legislature any health care taxes, like all California tax proposals, must be approved  by the voters.

Assuming a tax on wages is proposed, because the State has fumbled a lot of programs over the past two decades, it will be interesting to see if the over-65, most of whom wouldn't be taxed, would consider supporting the measure. Or would the Legislature run into a wall old protestors with signs saying "Keep the STATE GOVERNMENT out of my Medicare." My guess is that would happen if the bill continues to propose to interfere with Medicare.

And of course they would have to get it past voters who have good employer-sponsored health plans. What's the slogan going to be - "Trust Us State Officials to Get Healthcare Right!...even though we risked too much with the Affordable Care Act and now can't even pay that bill."

Consider this problem. In order to pay for health care for a child in a poor family whose Facebook page you don't follow, it might prevent you from buying the next iPhone, as you do each year. That could negatively impact workers in Kentucky.

Which interestingly brings us back to Kentucky's Senator, U.S. Senate Majority Leader Mitch McConnell, who according to a newspaper report noted he had nothing to do with Apple’s investment but came to the plant for the announcement to congratulate the company.

“The last thing I look at at night and the first thing I look at in the morning is my iPhone,” McConnell said. “And unlike most people, I think of Harrodsburg, Kentucky.”

So do some people in Cupertino, Senator.  But why do I doubt you ever think of them?