Jonathan Gruber's not-so-revealing revelations about Obamacare

MIT's Gruber excels at cynicism, not insight into the political process

Poor Jonathan Gruber. Having written the 2010 Patient Protection and Affordable Care Act all by his lonesome, he now has to watch the accolades heaped upon the law upon its passage turn into denunciations because he revealed the shocking truth about its contents.

Oh, wait -- Gruber, an economics professor at the Massachusetts Institute of Technology, didn't actually write the law, which has never had a lot of public support. And contrary to Gruber's comments about lawmakers disguising the tax increases in the ACA, critics have been offering detailed lists of the law's tax effects for years. Still, it was stunning to see someone so close to the Obama administration say such damning things about the way the ACA became law.

Thanks in particular to his comments about "stupid" voters, Gruber has become emblematic of the manipulation and deceit conservatives believe to have been crucial to enactment of the ACA.

As one reader of The Times put it in an email to me, "His comments represent the kind of elitist arrogance and nanny-state attitude that many already suspect exists throughout the left, and indeed, perhaps that is why so few claim to remember his involvement in particular -- he was not saying then anything that everyone else involved did not also believe, so he didn't stand out.... It is an attitude many of us believe exists, and he proves it does, and not just in his own mind."

I won't try to defend Professor Indefensible here. I will, however, try to push back against the cynicism inherent in his remarks.

Opponents of the ACA have consistently argued that the law's backers, and President Obama in particular, have lied to the public about its provisions. This includes the promises that the law would reduce health insurance premiums by up to $2,500, that people who liked their current insurance plans could keep them, that the law wouldn't insure people who were in the United States illegally and that there would be no federal funding for abortions.

Defenders of the law contend that although the administration overpromised, it didn't set out to deceive the public. The Gruber comments, on the other hand, speak of a deliberate plan to sneak at least two things by voters: a transfer of insurance costs from the sick onto the healthy, and a new tax on people with expansive health benefits.

In one of the newly surfaced videos, Gruber tells an audience at the University of Pennsylvania that "If you have a law which said healthy people are going to pay in -- if you made it explicit that healthy people pay in and sick people get money, it would not have passed." In another, he tells a think tank in Boston in 2011 that the "Cadillac tax" on expensive health plans was really a back-door way to phase out a popular but "regressive, inefficient and expensive" subsidy for employer health benefits.

"It turns out politically it's really hard to get rid of," Gruber said at the Pioneer Institute. "And the only way we could take it on was first 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. And the second was to start it late, start it in 2018.... This is the only political way we were ever going to take on what is one of the worst public policies in America."

Let's take those two assertions apart, starting with the notion that Congress hid the transfer of costs from the ill to the well. If that was a secret, it was a poorly kept one.

The CBO reported in November 2009 -- one month before the Senate passed the bill that would become the ACA -- that "some provisions would tend to increase the premiums paid by healthier enrollees relative to those paid by less healthy enrollees or would tend to increase the premiums paid by younger enrollees relative to those paid by older enrollees." Insurance analysts and actuaries also reported that the provision requiring insurers to cover sick people for the same price as healthy ones would shift costs from the former to the latter.

Granted, that's wonky. But there was wide public support for the insurance reforms in the ACA that stopped insurers from charging premiums (or denying coverage) based on people's pre-existing conditions. Unless voters engaged in magical thinking (which would not be unheard of), they had to recognize that requiring insurers to charge risky people less will necessarily force them to recover those costs from everyone else.

As for the Cadillac tax, Gruber was right about one thing: Economists don't like the tax subsidy for employer health benefits. The main defenders have been union-friendly Democrats and business-friendly Republicans.

The Cadillac tax wasn't actually motivated by a desire to eliminate a politically entrenched tax subsidy, however. The point was to persuade employers to stop offering plans that made healthcare seem free, shielding people from the cost of risky lifestyles and encouraging them to demand too much care. Economists -- including Gruber -- were saying back in 2009 that many employers were likely to scale back their insurance plans to avoid the tax.

Be that as it may, it seems like a safe bet that the rising cost of health insurance will gradually push more and more plans above the threshold for the tax. The CBO and many other analysts have been predicting as much since before the ACA became law. What we don't know is how quickly that will happen, because that will depend on how fast premiums rise and what employers do to their benefit plans in response. Gruber's certainty belies those important variables.

But I digress. One thing that definitely was not a secret was the likelihood that insurers would pass the Cadillac tax on to individual policyholders. That's true of just about any tax imposed on sellers: If they can transfer the cost to their customers, they will. Here's the way Ezra Klein, then of the Washington Post, characterized the Cadillac tax in 2009: "The tax will be levied on the insurer, who will in turn pass it onto your employer, who will in turn pass it onto you."

The fight over the Cadillac tax generated a fair amount of media coverage, so there were plenty of observations like Klein's out there. So where's the hidden truth that Gruber revealed? His comments about mislabeling seem to be based on the assumption that no one read the law and figured out what it would do, despite the intense interest in the media, in the healthcare industry, among business and labor groups, and among political partisans. 

That's an awfully dark assumption. But then, Gruber's not a political scientist. He's an economist best known for advocating a mandate on individuals to purchase coverage as part of a suite of insurance reforms. He also developed the economic model Democrats used to estimate how different provisions would affect the public. That work made him an important salesman for the economic benefits of healthcare reform in general and the ACA in particular, but not an insightful analyst of how the bill became law.

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