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  • Federal Obamacare Officials Once Recognized the Falsity of Their Current Argument about Tax Credits

    September 10, 2014 2:17 PM

    ​The Obama administration has claimed that despite recurring language in the Obamacare law limiting tax credits to people who buy insurance on an “exchange established by the state,” such taxpayer subsidies are also available to people who buy insurance on the federal exchange, Healthcare.gov.  (The availability of tax credits triggers employer mandates and penalties in any state where the tax credits are available, and the tax credits contain work disincentives and marriage penalties, so the tax credits are not a free lunch.)

    Architects of Obamacare like Jonathan Gruber have argued that it is “nutty” to argue that Congress intended to limit tax credits to state exchanges. But this supposedly “nutty” view was once the view of Gruber himself – and, apparently, the federal government itself. When the Department of Health & Human Services issued a contract to create a federal exchange in 2011, the contract assumed tax credits didn’t apply to the federal exchange. (The original contract did not include any functions to allow purchasers to calculate their tax credits, or factor in tax credits before displaying health-insurance prices, and the contract was not amended to apply tax credits to the federal exchange until much, much later.)

    Back in 2012, Gruber had himself admitted tax credits were not available on the federal exchange, contradicting his later statements. A 2012 video caught “Obamacare architect Jonathan Gruber saying, ‘If you're a state and you don't set up an exchange, that means your citizens don't get their tax credits.’” In July 2013, that video was “nationally-publicized due to the efforts of CEI’s Ryan Radia,” who helped expose Gruber’s two-faced turnabout. (“The Wall Street Journal, Bloomberg, Forbes, New Republic, Slate and others carried stories” due to Radia, noted the Des Moines Register.)

    Gruber claimed that what he earlier said on the video was just a slip-of-the-tongue—a “speak-o” equivalent to a typo—but it turned out that he publicly made the same exact admission on at least one other occasion in 2012, before that admission became politically inconvenient.

    As Forbes Magazine noted, “the irony is that” by 2013, “Gruber was deriding as ‘nutty’ and ‘stupid’ the contention that the Affordable Care Act required subsidies to flow through state-based exchange,” the very contention he himself made back in 2012. “It’s a ‘screwy interpretation’ of Obamacare, alleged Gruber in an interview with Erika Eichelberger of Mother Jones . . . ‘It’s nutty. It’s stupid… it’s essentially unprecedented in our democracy.’” Less than a week before his video was unearthed, “Gruber was on MSNBC’s Hardball,” where he proclaimed the “criminality” of those who argue tax credits are limited state-based exchanges.

    But as Scot Vorse discovered, the government itself once recognized that credits are limited to state-based exchanges. In light of that discovery, CEI has submitted two FOIA requests, one to HHS headquarters, and one to the Centers for Medicaid & Medicare Services, seeking additional information relevant to the government’s about-face.

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