In 2012, Obamacare’s Architect Agreed With ‘Right-Wing’ Strategy To ‘Gut’ Obamacare

Earlier this week, the U.S. Court of Appeals for the District of Columbia—the second highest court in the land—ruled that Obamacare’s subsidies for individually-purchased insurance could only flow through exchanges set up by state governments. Because only 16 states set up their own exchanges, some on the left arehyperventilating that “right-wing judges” are trying “to gut Obamacare” using “cynical” and “shamefully dishonest” tactics. But now, a 2012 video has emerged of the architect of Obamacare—MIT economist Jonathan Gruber—agreeing that only state exchanges are eligible for subsidies. Does that make Gruber a “shamefully dishonest” Obamacare-gutter?

Gruber was paid more than $400,000 as a White House consultant during the design and passage of the Affordable Care Act. Gruber then set up a lucrative business consulting for state governments like Wisconsin, Minnesota, and Colorado on how to set up their own exchanges. On January 18, 2012, Gruber spoke before the Noblis Innovation and Collaboration Center, headquartered in Falls Church, Virginia.

Gruber then: subsidies only flow through state-based exchanges

In his remarks, Gruber urged state governments to set up their own health insurance exchanges. A member of the audience asked: “It’s my understanding that if states don’t provide [exchanges], then the federal government will provide them for the states.”

Gruber responded: “What’s important to remember politically about [Obamacare] is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this.” (Emphasis added.)

The video was unearthed last night by Ryan Radia of the Competitive Enterprise Institute, and later highlighted by Peter Suderman of Reason.

Gruber now: it’s ‘nutty’ to assert that subsidies only flow through state-based exchanges

As Peter notes, the irony is that a year later, Gruber was deriding as “nutty” and “stupid” the contention that the Affordable Care Act required subsidies to flow through state-based exchanges.

It’s a “screwy interpretation” of Obamacare, alleged Gruber in an interview with Erika Eichelberger of Mother Jones in an article published on January 24, 2013. “It’s nutty. It’s stupid…it’s essentially unprecedented in our democracy. This was law democratically enacted, challenged in the Supreme Court, and passed the test, and now [Republicans] are trying again. They’re desperate.”

Last Tuesday, Gruber was on MSNBC’s Hardball, where he doubled down on the “criminality” of those who argue that the ACA only allows for state-based exchanges:

Chris [Matthews], it is unambiguous this is a typo. Literally every single person involved in the crafting of this law has said that it’s a typo, that they had no intention of excluding the federal states. And why would they? Look, the law says that people are only subject to the mandate if they can afford insurance, if it’s less than 8 percent of their income. If you get rid of these subsidies, 99 percent of the people who would get subsidies can no longer afford insurance, so you destroy the mandate. Why would Congress set up the mandate and go through all that political battle to allow it to be destroyed? It’s just simply a typo, and it’s really criminal that this has even made it as far as it has.

Gruber has a history of saying interesting things about his favorite health law. “What we know for sure,” he told Ezra Klein in 2009, “is that [Obamacare] will lower the cost of buying non-group health insurance.” In fact, Obamacare has increased the underlying cost of non-group health insurance by 49 percent in the average county. Now, Grubersays that Obamacare “isn’t designed to save money.”

I wrote on Tuesday that both sides are wildly exaggerating the policy implications of this D.C. court decision. If the Supreme Court upholds the appeals court ruling in Halbig v. Burwell, every state government will set up its own exchange. In other words, the ruling is nothing but a speed bump for Obamacare.

But it’s important for the public record to reflect the fact that it’s not “nutty” or “stupid” or “cynical” or “dishonest” to assert that the Affordable Care Act only authorizes the flow of subsidies through exchanges established by state governments. That’s in fact what the law actually says. It’s what the D.C. Court of Appeals ruled that the law says. And no less an authority than Obamacare’s principal architect, Jonathan Gruber, agrees.

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UPDATE: Michael Cannon has more on Gruber’s history in the Halbig case.

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INVESTORS’ NOTE: The biggest publicly-traded players in Obamacare’s health insurance exchanges are Aetna AET -0.45% (NYSE:AET), Humana HUM -0.12% (NYSE:HUM),Cigna CI -0.05% (NYSE:CI), Molina (NYSE:MOH), WellPoint WLP -0.16% (NYSE:WLP), and Centene (NYSE:CNC), in order of the number of uninsured exchange-eligible Americans for whom their plans are available.