Obamacare’s Architect Agreed That Only State Exchanges Could Offer Subsidies

Tonight, Reason’s Peter Suderman published an interesting revelation about the history of the decision reached this week by the D.C. Circuit Court of Appeals, that Obamacare subsidies couldn’t be distributed unless it happened through a state exchange.

It turns out that one of the key minds behind Obamacare, MIT professor Jonathan Gruber, entirely agreed with Michael Cannon and Jonathan Adler, the scholars behind the legal theory that backed up the Halbig plaintiffs who triumphed this week.  He’s on the record explaining that Obamacare subsidies are limited to state exchanges. 

Suderman writes:

Jonathan Gruber, a Massachusetts Institute of Technology economist who helped design the Massachusetts health law that was the model for Obamacare, was a key influence on the creation of the law. He was widely quoted in the media. During the crafting of the law, the Obama administration brought him on for his expertise. He was paid almost $400,000 to consult with the administration on the law. And he has claimed to have written part of the legislation, the section dealing with small business tax credits.

After the law passed, in 2011 and throughout 2012, multiple states sought his expertise to help them understand their options regarding the choice to set up their own exchanges. During that period of time, in January of 2012, Gruber told an audience at Noblis, a technical management support organization, that tax credits—the subsidies available for health insurance—were only available in states that set up their own exchanges.

A video of the presentation, posted on YouTube, was unearthed tonight by Ryan Radia at the Competitive Enterprise Institute, which has participated in the legal challenge to the IRS rule allowing subsidies in federal exchanges. Here’s what Gruber says.

“What’s important to remember politically about this 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]“

In case you need to see it to believe it, here is the video:

It’s kind of embarrassing, considering that Gruber told Mother Jones in 2013 that Adler and Cannon’s theory was nutty and stupid:

Jonathan Gruber, who helped write former presidential candidate Mitt Romney’s Massachusetts health care law as well as the Affordable Care Act, calls this theory a “screwy interpretation” of the law. “It’s nutty. It’s stupid,” he says. And beyond that, “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.”

Oops. 

It could be that he suffers from short-term memory loss. A few days ago, he was interviewed by Chris Matthews and he argued that the issue is simply a typo:

Let`s go to Jonathan. Jonathan, was this a typo, saying that only if you had a state exchange could you get a subsidy and therefore be required to participate, or was it some significant policy decision not to include  states that didn`t have exchanges?

JONATHAN GRUBER, FORMER WHITE HOUSE ADVISER: Chris, 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.

Double oops. 

As I wrote a few months ago, this is also the same Gruber who said in January that Obamacare wasn’t designed to save money, even calling the idea that savings were a “misleading motivator” for Obamacare. This was after he very actively promoted the deficit-reducing side of the law before it was adopted and called Obamacare “a historic and cost-effective step in the right direction” toward saving our health-care cost problems. He’s also the guy whose work was used to create the appearance of a consensus among health economists about the ACA, without revealing that he was a paid contractor.

Suderman’s piece is here.