Bootleggers, Baptists and the Badger State

Many of you recognize the term “bootlegger-Baptist coalition,” first introduced by Bruce Yandle in Regulation (1983). The bootleggers essentially secure transfers under the moral legitimacy provided by the Baptists (the metaphor refers to the common interest of Baptists and bootleggers in securing regulation of alcohol sales). For those of you who have not encountered this term before, there is a fine piece by Randy Simmons, Ryan York, and Dianna Thomas in the Winter 2011 edition of the Independent Review entitled “Bootleggers, Baptists, and Political Entrepreneurs.”

As used by Yandle and others, the term refers to the rather counter-intuitive coalitions that often emerge around regulatory policies. Yet, one wonders whether there has been something of a bootlegger-Baptist coalition in the Badger state. I know a number of public school teachers and I am persuaded that they (and many of their representatives) are convinced that the National Education Association and its state affiliates are interested in educational quality. For them, it may be “about the children.” They may be the Baptists, to use Yandle’s metaphor. Who then are the bootleggers? There are many candidates, of course, but one may be the union’s health insurance company.

According to an article in today’s Milwaukee Journal-Sentinel, two-thirds of the state’s teachers are insured by the WEA Trust, the health insurance corporation created by the Wisconsin Education Association Council (WEAC), the state affiliate of the NEA. Because WEA Trust secures its business via collective bargaining agreements, it has not been subject to the same competitive environment as other insurers.

Brown Deer school district (1800 students) decided to break with WEA Trust at the beginning of the fiscal year. As a result “the district saved $170,000 in just one year – the equivalent of at least two teachers.” Of course, the decision to change insurance carriers (but not reducing the level of benefits) generated an interesting result:

Earlier this year, the Brown Deer district’s teachers union filed a complaint with the Wisconsin Employment Relations Commission over the district’s decision to switch from WEA Trust. Koczela [director of finance for the Brown Deer School District] suspects the move was aimed at protecting the insurance company rather than the employees’ benefits, which she said remained the same with the lower-cost carrier.

Now that the districts have been freed from collective bargaining over benefits, they are free to drop WEA Trust. Governor Scott Walker claimed that simply providing teachers with the same health care program enjoyed by state employees would save taxpayers $68 million a year (a claim that WEA Trust rejects) and others would place at the low end of the range. Whether they avail themselves of these savings—and whether the savings are as advertised—remains to be seen.

How much is collective bargaining worth to WEA Trust? An analysis released last year by the Education Action Group and the John K. MacIver Institute for Public Policy, reported that school districts that cover 100 percent of the premiums paid WEA Trust $1,724 per month (family coverage); those who went with non-WEA coverage paid $1,466 per month. This was based on data on 364 school districts provided by the Wisconsin Association of School Boards. As a result of these premiums and the barriers to entry created via collective bargaining agreements, WEA Trust has amassed over $316 million in net assets (2009). Although WEAC and the WEA Trust share a common address, they are separate entities. It would be illegal for WEA Trust to simply transfer resources to the union (although the above mentioned report suggests that it may contract for services with the union).

For those interested in more on this topic, here is a link to a brief analysis conducted by the Wisconsin Policy Research Institute (the original source of Walker’s claims).

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