For all the hand-wringing over economist Jonathan Gruber’s comments about “the stupidity of the American voter,” there’s been less outrage over the official obfuscation of Obamacare that his comments have revealed. Perhaps that’s because the obfuscation is less shocking, on the surface, than the disdain Gruber shows for the unwashed masses.
But it’s actually more important, because it reveals a pattern of deception surrounding the law that’s been there from the very beginning. Gruber was about as much of an insider during the creation of Obamacare as one could be, and it’s reasonable to think that his understanding of the law was the same, more or less, as that of the White House. Here’s the three main falsehoods about Obamacare, perpetuated by the administration and the law’s champions in Congress, that Gruber’s candor have revealed
1. The Individual Mandate ‘Is Absolutely Not a Tax Increase’
In a 2009 interview with George Stephanopoulos of ABC News, President Obama emphatically rejected the notion that the individual mandate is a tax. He was adamant that it was a penalty and not a tax, reasoning that because people without health insurance sometimes end up in the emergency room, causing costs to rise for the rest of us, the individual mandate penalty was not a tax.
Then in 2012, White House attorneys argued before the Supreme Court that it was indeed tax, and repeatedly called it that before the Court, which in its ruling found that the only way the mandate could pass constitutional muster was if it is construed as a tax, not a penalty. In what is by now Gruber’s most famous video, he explains that the bill was “written in a tortured way to ensure that CBO did not score the mandate as taxes. If CBO scored the mandate as taxes the bill dies.” Clearly, he considers the mandate a tax, albeit one cleverly written not to be scored as such by the Congressional Budget Office, but a tax nonetheless.
This is a pattern. In one of the Gruber videos, he admitted that the purpose of the “Cadillac tax” on certain employer-sponsored health plans is to discourage employers from providing health insurance. The ultimate goal, Gruber explained, is to get rid of the tax subsidy for employer health plans altogether, albeit indirectly, by “mislabeling it, calling it a tax on insurance plans rather than a tax on people when we all know it’s a tax on people who hold those insurance plans.” At a town hall meeting in 2009, the president specifically said this was not the purpose of the Cadillac tax and that it had been “taken off the table.”
2. Congress Meant for Subsidies to Flow Through State-based and Federal Exchanges
As Jonathan Tobin pointed out at Commentary, perhaps the greatest effect Gruber’s comments might have is on the latest Supreme Court challenge to Obamacare in King v. Burwell, which alleges that federal subsidies for health insurance are only legal if dispensed through an exchange established by a state. That is, the subsidies flowing through federally-run exchanges in the 36 states that opted out of the scheme are illegal—Congress never authorized subsidies for those exchanges, in part because the law’s proponents never envisioned that so many states would decline to implement this part of the law.
Why did the administration and congressional Democrats think states would voluntarily create exchanges? Because if they didn’t, their residents wouldn’t get any subsidies to offset the cost of Affordable Care Act-mandated health coverage. The law’s champions, Paul Krugman and the like, have made much of the idea that this provision of the law was a “typo” or a mere drafting error. Why else would Congress have restricted subsidies to “exchanges established by a state”?
Yet in a Gruber video that first surfaced months ago, he explained that it’s an intentional feature of the law. Since Congress couldn’t simply command states to set up exchanges, it gave them an incentive to do so. Peter Suderman at Reason pointed to the Gruber comments back in July and made the very sensible point that “it is quite clear that in 2012 he accepted the essence of the interpretation advanced by the challengers.” (Note the updates at the end of Suderman’s piece. The “speaking off-the-cuff” defense Gruber recently gave to Ronan Farrow on MSNBC was first made to Jonathan Cohn of The New Republic.)
3. Obamacare Will Make Health Insurance More Affordable
In a fourth video, Gruber tackles the question of cost control and affordability with his usual candor, explaining that “Barack Obama’s not a stupid man, okay?” His point is more subtle than simply declaiming the ignorance of the American voter. Again, the idea here is that the administration knowingly misled:
He knew when he was running for president that quite frankly the American public doesn’t actually care that much about the uninsured… What the American public cares about is costs. And that’s why even though the bill that they made is 90 percent health insurance coverage and 10 percent about cost control, all you ever hear people talk about is cost control. How it’s going to lower the cost of health care, that’s all they talk about. Why? Because that’s what people want to hear about because a majority of American care about health care costs.
The implication here is that the public, being rather simple-minded, can be distracted from what’s actually in the law by talking about cost control, which isn’t really something the law addresses. For Gruber, the assumption is that most Americans can’t be bothered with what’s in the law. Same with former House Speaker Nancy Pelosi, who famously quipped that Congress had to pass the law “so you can find out what’s in it.” The falsehood that Gruber’s comment reveals, though, is that Obamacare will make health coverage cheaper. Among the president’s many claims when he was campaigning back in in 2008 was that his healthcare reform would reduce premiums by $2,500 for a family of four. He repeated this again and again.
Anyone who understands how premiums are calculated knew at the time the assertion was dubious. An average reduction of $2,500 for a family of four across the board is too neat and tidy a figure to reflect the complicated actuarial realities of premium rate-setting. But no matter: what we’ve actually seen in the nearly five years since the law passed is that premiums have gone up considerably. By some estimates, the average rates in the individual market have increased nearly 25 percent compared to what they would have been without Obamacare, and have increased measurably in 45 states. In the employer-sponsored market, where most Americans get their health insurance, premiums rose by about 3 percent this year—a modest increase, but far from the $2,500 drop that was promised.
It’s a fair bet that if Gruber knew the law wouldn’t reduce premiums, so did the administration. Instead of talking about the trade-off between coverage and cost, candidate Obama simply argued that his reforms would lower costs, because that’s what the people wanted to hear.
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