Editor’s note: This commentary is by Scott Mackey, who lives in Waterbury and is the managing partner at KSE Partners LLP, a technology, communications and government affairs firm based in Montpelier.
[N]ew York Times columnist David Brooks wrote an interesting opinion piece on Feb. 12 about how the economic restructuring envisioned by Bernie Sanders would, if adopted, fundamentally alter the U.S. economy in ways that most Americans do not understand. He mused about why so many Americans – especially young people – would abandon the current American economic model in favor of the European model. He closed with this observation:
It’s amazing that so many young people want to mimic a continent that has been sluggish for decades. It’s amazing that so many look to the future and want a country that would be a lot less vibrant.
In watching Bernie’s campaign catch fire across the country, what has been most interesting to me is how popular he is among young people. He crushed Hillary Clinton in New Hampshire by a 4 to 1 margin among the youngest voters, and he continues to excite and motivate young people at rallies and other campaign events.
The more I think about it, though, the more I understand why young voters are looking for a change. I believe that young people have a sense that our political and economic system seems stacked against them in ways that they cannot fully understand or articulate. Bernie has tapped into this youthful angst by proposing free college tuition, relief from student debt, and proposals to “tax the rich.”
Yet the issues with our economic system are broader than these high profile issues. Many young people are not part of the vibrant, dynamic economy of the baby boomer generation that Brooks discussed in his column. There is a nagging suspicion that “the system” is set up to benefit the older, middle and upper middle class Americans. And to a significant extent, they’re right.
Repealing the inspection requirement would disproportionately benefit young people who drive old cars and help make living in Vermont a little less costly every year.
Government is a part of the problem, and not just in “conservative” states. In fact, I would argue that the challenges facing young people in Vermont are actually worse than the country as a whole. Housing costs are exorbitant, college is very expensive, good paying jobs are scarce, and our population is declining as young Vermonters go elsewhere to seek economic opportunities. However, if we really want to help young people here in Vermont, the Legislature does not need to wait for Congress to act (or not act) on the things that Bernie is proposing. We need to think “outside the box” and really address some of the structural unfairness in government policies that contribute to making the cost of living high for young Vermonters.
Below are four things that the Vermont Legislature could do that would make a real difference in the cost of living for young Vermonters.
• Repeal community rating for health insurance or allow businesses and individuals to shop for health insurance in the national market. Under Vermont law, health insurers are required to price their policies to share the risk across all age groups and Vermont businesses and individuals are required to purchase insurance from Vermont insurers. So premiums for young, healthy people who do not use many health care services are the same as those for older people who incur huge health care costs. This law, which has been on the books since the 1990s, has essentially destroyed competition in the Vermont insurance market. Our business covers the full cost of health insurance premiums for our single employees, and as a result we pay around $5,000 per year for cheapest “Bronze” plan. As a result, many of our employees who are in their 20s receive a very expensive benefit that they hardly ever use. If community rating were repealed, and we were allowed to shop for health insurance on a national market, our insurance costs would drop and we could afford to increase salaries for our employees.
• Enact community rating for automobile insurance. Since community rating is sacrosanct in Vermont, here’s an alternative approach. As discussed above, young people are subsidizing the health insurance premiums for older people through community-rated health insurance. However, when it comes to automobile insurance, what’s good for the goose is not good for the gander. Right now, young people pay high auto insurance premiums because they tend to have more accidents and impose higher costs on the system, and we allow insurance companies to price that risk into the policies they offer. If we are going to ask young people to subsidize the much more expensive health insurance costs, isn’t it fair to ask older drivers to pay higher premiums to lower insurance costs for young drivers? A system of community rating for auto insurance would equalize premiums by age – my premiums would go up, but the premiums for my son and my daughter would go down.
• Eliminate the annual automobile inspection requirement. Young Vermonters generally do not drive brand new cars. Not only are new car payments expensive, but collision insurance on a new car also drives up the cost of insurance significantly. Each year, Vermonters who drive older cars dread their annual inspection which can result in hundreds of dollars in required repairs – new windshield, ball joints, exhaust, etc. If you drive an old car, you know what I’m talking about. But surely repealing the inspection requirement would lead to a carnage on our highways, right? Wrong. I lived in Colorado for 10 years, where there was no safety inspection requirement, and I can assure everyone that the highways were safe. There were lots of cars with cracked windshields in Colorado, but nobody seemed any worse off for it except the windshield replacement companies. Repealing the inspection requirement would disproportionately benefit young people who drive old cars and help make living in Vermont a little less costly every year.
• End the practice of license suspensions for young people with minor offenses not related to driving. The Legislature has, over the years, enacted a series of license suspensions and penalties for ridiculously petty minor offenses like under age possession of tobacco products or alcohol. First of all, last time I checked, 18-20 year olds in Vermont are full citizens of our state. How is it not an equal protection violation to impose different penalties on citizens of a certain age? But setting that aside, it is absurd to take away someone’s right to drive because they possessed a cigarette or were caught drinking a beer at a party – things that many of us did when we were their age with no repercussions. These penalties and fines impose unwarranted and unjustified costs on young people who already face low-paying jobs, expensive auto insurance, and exorbitant housing costs. Driving privileges should only be taken away for driving related offenses, and Vermont citizens of all ages should be treated the same.
I believe that these actions would help make the economic playing field for young Vermonters a little more level. I suspect that none of them would ever actually get enacted because they take on entrenched interests or would involve shifting costs to people my age.
