Jonathan Gruber Accidentally Tells the Truth

One of the chief criticisms of those who did not like the Halbig decision is that Congress could not possibly have intended to restrict federal subsidies for coverage under Obamacare to only those states that established an exchange. Furthermore, by not taking intent into account, the D.C. Circuit Court of Appeals was creating “an ‘absurd’ result.” It is rather difficult to divine congressional intent even under the best of circumstances, and to the best of my knowledge, no one has actually done a good job of showing that Congress did not intend the result in Halbig; rather, opponents of the decision simply content themselves with asserting that Congress did not intend and could not have intended the substance of the Halbig ruling. Assertion is not evidence, but try telling these folks that.

From the time that the Halbig ruling was issued, my opinion has been that the text of the Affordable Care Act–and not congressional intent–governed and governs. But if people want to have a discussion about intent, I am happy to do so. Behold Jonathan Gruber, one of the chief architects (if not the chief architect) of Obamacare and Romneycare, who admitted long ago that the intent of the ACA was entirely consistent with the D.C. Circuit’s ruling in Halbig:

Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology, is widely known as one of the architects of both Romneycare and Obamacare. He was paid almost $300,000 (no wait, $400,000) by the Barack Obama administration for “special studies and analysis” of the various health-care bills. His models of the economic effects of the bill were frequently cited by journalists and the administration. He claims to have helped write the part of the bill that deals with small-business tax credits. He was, in short, intimately involved in these efforts.

In January 2012, Gruber apparently gave a talk at some sort of conference at Noblis Inc., which, according to its webpage, is a “nonprofit science, technology, and strategy organization.” At that talk, Gruber made the following observation:

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.

Why is this so important? Because Gruber made this argument in January 2012. This was after the filing of Pruitt v. Sebelius (a Halbig-like case brought by Oklahoma’s state attorney general) but before the U.S. Supreme Court’s ruling on the constitutionality of the Affordable Care Act, and before all the other related cases were filed. At the time he gave this talk, Halbig’s argument was barely on the radar. Yet Gruber, one of the law’s architects, clearly had an understanding of the provision that liberals now say no one shared.

I’ve listened to Gruber’s whole presentation to make sure this wasn’t a poorly phrased snippet unfairly clipped out of context. It’s not. Gruber is succinctly stating the argument made by the plaintiffs in Halbig: that premium subsidies will not be available on federal exchanges, and that this is supposed to incentivize states to build their own exchanges.

To be sure, this was still two years after the law passed, and my understanding is that the court is not supposed to pay attention to post-facto statements about the law’s effect or intent. But unless this is some sort of elaborate hoax, I think this definitively puts to rest the notion that none of the bill’s architects could possibly have thought or intended that the law would have this effect. Gruber thought the law would have this effect — and if anyone would know, he would.

Gruber has tried to claim that this quote was “just a mistake.” If so, it was a mistake that Gruber was perfectly happy to repeat:

. . . John Sexton at Breitbart has uncovered what appears to be another January 2012 speech in which Gruber makes exactly the same point. The Official Blog Spouse has provided a transcript of the relevant bits:

The third risk, and the one folks aren’t talking about, which may most important of all, is the role of the states. Through a political compromise, it was decided that states should play a critical role in running these health insurance exchanges. And health insurance exchanges are the centerpiece of this reform, because they are the place that individuals can go to shop for their new, securely priced health insurance. But if they are not set up in a way which is transparent, and which is convenient for shoppers, and which allow people to take their tax credits and use them effectively by health insurance, it will undercut the whole purpose of the bill.

Now a number of states have expressed no interest in doing so. A number of states — like California, has been a real leader — one of, I think it was the first state to pass an exchange bill. It’s been a leader in setting up its exchange. It’s a great example. But California is rare. Only about 10 states have really moved forward aggressively on setting up their exchanges. A number of states have even turned down millions of dollars in federal government grants as a statement of some sort — they don’t support health care reform.

Now, I guess I’m enough of a believer in democracy to think that when the voters in states see that by not setting up an exchange the politicians of a state are costing state residents hundreds and millions and billions of dollars, that they’ll eventually throw the guys out. But I don’t know that for sure. And that is really the ultimate threat, is, will people understand that, gee, if your governor doesn’t set up an exchange, you’re losing hundreds of millions of dollars of tax credits to be delivered to your citizens. [emphasis added]

Like the Official Blog Spouse, I listened to the audio to make sure that, first, it wasn’t simply the audio from the earlier video, and second, that the new clip wasn’t taken out of context. It’s clear that the audio is from an entirely different event; though Gruber repeats himself a lot from speech to speech (not surprising, because Gruber was on book tour for his cartoon book on Obamacare), the questions in the Q&A period are not the same. It’s also quite clear that this was not snipped out of context; we now have evidence of Gruber twice making the same argument about subsidies in January 2012.

MSNBC’s Adam Serwer reached him for a comment on the second clip: “A second recording has surfaced showing Gruber making similar statements about subsidies not being available on federally run exchanges. Asked over e-mail whether those remarks were a mistake, too, Gruber wrote back, ‘same answer.’ ”

I believe that Gruber sincerely does not remember making these remarks. Memory is fallible; at some point, Gruber probably changed his mind and forgot that he had ever believed otherwise. People show a strong tendency to edit their recollections of prior beliefs to reflect the “correct” answer, and even brilliant economists are not immune to this common cognitive bias.

But though I do not fault his honesty, I also think that in January 2012, Gruber did believe that premium tax credits would only be available on state-created exchanges, and that this would give states a strong incentive to create exchanges.

More here from Peter Suderman. Avik Roy notes that “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.” Never let it be said that Gruber allows a need for consistency to get in the way of his advocacy. Michael Cannon sees a legitimate chance to pile on, and does:

I don’t mean to overstate the importance of this revelation. Gruber acknowledging this feature of the law is not direct evidence of congressional intent. But Gruber is probably the most influential private citizen/government contractor involved in that legislative process. He was in the room with the people who crafted this bill. There may be videos of them talking about this feature too. (I wouldn’t know; I only researched congressional statements made pre-enactment.) At a minimum, however, with the D.C. Circuit and the Fourth Circuit and now Jonathan Gruber lining up against the idea that it is implausible that Congress could have meant what it said, we can dispense with that argument once and for all.

Even Dave Weigel, who is no friend of the Vast Right Wing Conspiracy, is forced to admit what anyone with eyes can see:

. . . this bolsters the libertarians’ case. Gruber is acknowledged, by everyone, as an architect of the ACA. There is, to date, no evidence that he flogged the carrot/stick subsidies idea on Congress, and as Cannon writes in a piece at Forbes, Gruber has done hours of scoffing at the rationale behind Halbig. It just happens that in early 2012, when Cannon was barnstorming states to get them to avoid creating exchanges, Gruber was telling them they had better create exchanges or they wouldn’t get subsidies.

Of course, there is a way for supporters of Obamacare to remedy the problems caused by the Halbig ruling, but Tyler Cowen points out why that remedy won’t be employed:

It would be much easier if (some) people would simply say “Of course this normally should be kicked back into the legislature for clarification.  But I don’t want to do that because I don’t regard Republican control of the House, and how that control is used, as a legitimate form of rule.”  One may agree, or not, but the nature of the case is pretty clear.

So, to sum up, opponents of the Halbig ruling are (a) against a plain-text reading of the Affordable Care Act, (b) against a plain-text reading of a point one of the chief architects (if not the chief architect) of Obamacare and Romneycare said repeatedly, and (c) against the very notion of democratic republicanism itself. Which paints them in a rather tight corner, don’t you think?