Oklahoma Considering Health-Care Compact

April 8, 2011

Early in my tenure at Oklahoma’s largest newspaper I heard a wonderful story about E. L. Gaylord. Mr. Gaylord was the publisher for whom I worked during my 12 years at the editorial page of The Oklahoman.

Many years before my arrival in 1990, someone on the editorial page had thought it would be a wonderful thing to support the local public transit system’s desire to construct shelters here and there along city bus routes. An editorial soon appeared, waxing eloquent about how much better this would make the city’s mass transit services.

I can attest that Mr. Gaylord generally let his editorial writers develop ideas without his interference, trusting their conservative instincts. But that particular editorial provoked a reaction on the top floor of the old Oklahoma Publishing Company building in downtown Oklahoma City.

The wise Mr. Gaylord—whom I came to admire deeply—called in the editorial writer and for some impressive length of time read him the riot act, explaining his view that building bus shelters was a waste of taxpayers’ money. Besides, he said, the sides of bus shelters were competitors for scarce advertising dollars. Why, he wondered, should a private company endorse use of taxpayer money to build something that could then be used to compete against that private company?

After all, he was the boss.

The very next day, an editorial began, “Upon further reflection ...”

The exercise that began with that second editorial became known, in OPUBCO lore, as “tearing down the bus shelter.” It was an apt way to describe any situation at the company where you screwed up massively enough that you had to take it all back, in a hurry, and try to find a way to move on and keep your job.

The joke around the OPUBCO building—even years later, after the newspaper relocated to Britton Road on the north side—was “you don’t want to have to tear down the bus shelter.”

I have remembered those stories in recent weeks, while reporting on—and trying to understand—health care compacts, health care exchanges, the Republican Legislature, and Governor Mary Fallin.

First, compacts.

Eric O’Keefe is a critic of the Obama Administration’s signature achievement, the 2010 health care act, and is chairman of the national Health Care Compact Alliance (healthcarecompact.org), a bold alternative to the president’s drive to bring more and more of the economy under federal government control.

A health care compact could be compared to interstate compacts which exist on a wide range of issues, including oil and gas. O’Keefe notes that more than 200 such agreements have developed over the years. Although voluntary, when agreed to by Congress under Article I, Section 10 of the U.S. Constitution, compacts have the force of federal law.

As O’Keefe puts it, “The Health Care Compact is a governance reform, not a health care reform. Most Americans are frustrated by our health care system’s flaws and dismayed about the number of people the system fails. We have not been thinking creatively enough about the issue because too many of us assume that important public policy issues must be decided at the highest level, when just the opposite is true. An issue as personal as health care should be decided as close to home as possible.”

The compact idea would shift responsibility for health care regulations from Washington to the states. The idea is not proscriptive of health care policy outcomes, but a shift in the matter of “who decides”—putting responsibility with the states, and the people. You could say it is a “federalist” solution, as opposed to a “federal” solution.

Writing for National Review Online on March 10, O’Keefe and Leo Linbeck III contended, “Centralized control of an industry that affects all 309 million Americans, has revenues of over $2.3 trillion annually, and employs more than 14 million people is not possible.”

Today, the pair say, “Citizens in more than eleven states are working to get the Health Care Compact passed by their legislatures, and the compact is being actively discussed in at least 25 other states.”

Oklahoma is one of the states seriously considering a compact, in the form of Senate Bill 722, co-sponsored by state Sen. Clark Jolley of Edmond and state Rep. Glen Mulready of Tulsa. SB 722 cleared the Senate, 33-11, on March 17 (Saint Patrick’s Day) and went from there to the state House.

Many who support compacts also support creation of a health care exchange in Oklahoma.

Also on Saint Patrick’s Day, the state House voted 51-34 to send House Bill 2130 to the Senate. As can be discerned from the closeness of the vote—just enough in support to keep the proposal alive—many legislators had and have qualms over the exchange, at least in this form.

On paper, HB 2130 deals “merely” with membership and appointments to the Health Care for the Uninsured Board (HUB) to oversee implementation of a health care exchange, a crucial mechanism needed if the 2010 federal health care law stays in force.

Passage of the bill would allow state officials to use a federal grant of $54,582,269, awarded in February, to design Oklahoma’s exchange.

When HB 2130 came to the House floor, supporters asserted you didn’t have to like the federal law to agree on the need for the exchange. They said, sensibly, the state should take practical steps to be ready in case the federal health care law passes constitutional muster and is not repealed.

Opponents said many things, including that it is hypocritical to try to kill Obamacare in a federal lawsuit while taking Uncle Sam’s money to implement one of its provisions.

Many knowledgeable analysts have in the past made the case for health care exchanges, and the idea of exchanges predates the federal law. But the federal law is so weighed down with mandates that the original market orientation of health care exchanges seems lost in the shuffle.

Five roll call votes, and debate that ran for more than an hour, were required to keep HB 2130 alive and move it to the Senate.

It turned out that the concept of private health care exchanges has some support, but establishment of this particular mechanism—with its ties to the new federal policy regime—barely mustered a majority in the Oklahoma House.

In that round, the measure prevailed with four Democrats joining about 65 percent of the Republican caucus in support. Those 34 “no” votes came from a mix of Republicans and Democrats, while 16 members avoided the final roll call.

Governor Mary Fallin has supported the exchange idea for months, and a few days after HB 2130 cleared the House she upped the ante a bit. In a letter to every member of the Legislature on March 22, she issued a pragmatic argument for accommodation of federal regulation even while restating her disdain for Obamacare.

A week later, HB 2130’s prospects took a turn for the worse when Senate President Pro Tem Brian Bingman of Sapulpa said the upper chamber would not hear the bill. This was not entirely unexpected; rarely have I seen as much passion from grassroots conservatives in opposition to a measure that had such strong leadership support.

Pulling away from the particulars of HB 2130 to focus on the realities of markets, including health insurance markets, consider the insights of Professor Richard A. Epstein, conclusions he reached after actually studying the federal law.
Writing in the Texas Review of Law & Politics (Fall 2010), Epstein calls the insurance exchanges the “first major challenge for Obamacare.” He asserts the “exchange is not an open access regime. The only insurers entitled to join … have to meet certain key requirements: for example, the kinds of coverage they have to supply, the persons to whom they must supply it, and the number and types of individuals they have to enroll.” Standardization will “undermine the ability of innovative firms to gain greater market share by altering the type of coverage that they choose to supply.”

Epstein believes “nothing concentrates the mind so well” as the real world. He characterizes as a stop on “the road to perdition” the federal law’s efforts to require health care providers to honor and finance all requests for health care. The “implicit subsidies” laced throughout Obamacare, he says, could cause exchanges to “easily break down.”

The second smartest man in the world when it comes to understanding the intersection of law and economics (Robert Bork being the smartest), Dr. Epstein writes, “Just because an exchange is open for business does not mean that somebody will decide to participate in it. … It will not be easy to push employers or insurers much harder. Nor can one push harder on health care providers. So it is back to the usual outcome under price controls. It is necessary to constrain prices by letting people form queues, which dissipate some of the demand. That will happen in the United States, as it has long occurred in Canada.”


Just as a conversation starter, some wonder if Oklahoma should exchange the exchange—or at least exchange Mr. Obama’s federal grant—for a compact.

The state can keep Insure Oklahoma, strengthen it with more realistic co-pays for the working poor, and keep the policy focus on an Oklahoma version of pragmatic compassion that doesn’t bankrupt this and future generations.

Oklahoma could look at other models and spend a few million dollars of its own money, instead of a dime of the king’s pence—when that pence comes with language like implementing the provisions of the “affordable” health care act.

In other words, policymakers might come to the conclusion that, “Upon further reflection …”

After all, the people are the boss.

Patrick McGuigan (M.A. in history, Oklahoma State University) is editor of CapitolBeatOK.com.