Grubergate

Grubergate Part 1: 'The Stupidity Of The American Voter'

Nov 30, 2014, 10:26pm

Grubergate Part 1: 'The Stupidity Of The American Voter'

Michael F. Cannon

 

Recently, video surfaced of MIT health economist Jonathan Gruber admitting the Patient Protection and Affordable Care Act – a.k.a. ObamaCare – “would not have passed” if Democrats had been honest about its costs. The renowned architect of the Act admitted “this bill was written in a tortured way” to create a “lack of transparency,” an effort that succeeded thanks to the “the stupidity of the American voter.” The video was one of a series of recently discovered video and audio recordings in which Gruber either boasts about how architects of the law deceived the public, or undercuts the government’s position in a case (King v. Burwell) soon to be heard by the Supreme Court that would make the law’s costs more transparent. Gruber has accepted an invitation to testify before Congress on December 9. Here is my effort to help members of Congress and the public understand the depth of the deception he admitted.

“Grubergate” has so many facets, I divided this post into several parts. Here in part one, I present the full context behind Gruber’s “stupidity of the American voter” comments. The context is essential for understanding the breadth and depth of the deception he admitted. Part two explains that indeed Gruber admitted the entire PPACA is just one giant deception. Part three explains that Gruber also admitted he approves of such deceptions when necessary to achieve universal coverage. (Too harsh? Read on.) Part four explains how Gruber’s remarks prove Chief Justice John Roberts was wrong in NFIB v. Sebelius. Part five explains how King v. Burwell, the next big ObamaCare case to go before the Supreme Court, could thwart efforts to hide the law’s costs from voters. Part six shows how Gruber and other PPACA architects, including President Obama and former House Speaker Nancy Pelosi, are determined to keep the deception going. Part seven explains how many supporters of universal coverage don’t even realize they are among those the architects deceived. Part eight offers Congress suggestions on minimizing the harm from the PPACA’s deceptions and preventing similar deceptions in the future.
These posts have been difficult to write. Gruber has always been generous and gracious with me. As you read, bear in mind he is a target of criticism because he has been more honest than the PPACA’s other architects. If you are one of his critics and cannot stop at polite criticism, just leave him alone.
The Full Context Of Gruber’s “The Stupidity Of The American Voter” Remarks
Gruber’s controversial “stupidity of the American voter” remarks came at an economic conference at the University of Pennsylvania in October 2013, three and a half years after the PPACA became law. Gruber was responding to co-panelist and U. Penn economist Mark Pauly. Here’s the entire panel discussion.

Beginning at about 9:45, Pauly criticized the PPACA because the law makes it impossible to discern who is paying, who is benefiting, and how much. Congress should have made the law’s costs and benefits more transparent by financing its subsidies with an explicit tax, Pauly argued, which Congress would “vote up or down”:

And then, once it was there, there would be no reason to change it, and no reason to hold the government hostage to change it, because of the back-door way that it was financed.

Instead, the law’s lack of transparency fueled the backlash against it, including Republican efforts to defund it.
Pauly then criticized the PPACA’s use of community-rating price controls. Community rating forces insurers to charge everybody the same price for health insurance. It thus creates an implicit tax-and-transfer scheme: it reduces premiums for the sick (a hidden subsidy) and pays for it by increasing premiums for the healthy (a hidden tax). These taxes and subsidies are hidden. They do not appear in government budgets, much less as a line item on anyone’s tax return. No one knows exactly how much they’re being taxed or subsidized. Community rating is the true centerpiece of the PPACA. The law’s individual mandate and premium subsidies exist solely to mitigate the harms caused by this so-called “consumer protection.”
Pauly, who has been the economics profession’s leading critic of community rating for more than 40 years, called community rating “terribly inefficient” and “the world’s dumbest way to do a good thing” – i.e., “helping out high-risk people” with hidden subsidies financed by “effectively an excise tax on health insurance purchased by low-risk people.” It would be better, he argued, if Congress had instead created transparent subsidies, with larger subsidies for the sick, financed by a transparent tax. To recap, Pauly was criticizing the centerpiece of the PPACA for its lack of transparency.
Here’s how Gruber responded:

Mark did make a couple of comments that I do want to take issue with. One, about, you know, transparency in financing, and the other is about moving from community rating to risk-rated subsidies.
It’s just – you can’t do it, politically. You just literally cannot do it…
This bill was written in a tortured way to make sure [the Congressional Budget Office] did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. Okay? So it’s written to do that.  In terms of risk-rated subsidies, if…you made explicit that healthy people pay in and sick people get money, it would not have passed…
Lack of transparency is a huge political advantage. And basically – you know, call it the stupidity of the American voter, or whatever – but basically that was really, really critical to get anything to pass...
Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not…Yeah, there’s things I wish I could change, but I’d rather have this law than not. And I think that involves some tradeoffs that, you know, we don’t prefer as academic economists, but which are realistic.

Here’s a video clip with just those remarks:

Gruber later apologized for calling voters stupid, saying he “spoke inappropriately.” He did not take back the substance of his comments, with good reason. Aside from the “stupidity” comment, everything he said is true.
When Robbing Peter To Pay Paul, Blindfold Peter
A government that robs Peter to pay Paul can always depend on the support of Paul. The one who presents a problem is Peter. If enough “Peters” learn that some new legislation would leave them with less, they can and will stop it.
Legislators who hide the fact they are taxing Peter improve their odds of success. When state legislatures mandated that health insurers cover minimum postpartum hospital stays in the 1990s, the costs were passed along to consumers through higher insurance premiums. Even if consumers were aware of the mandate, they could never be sure whether or how much they were being taxed. In contrast, the costs of providing this benefit to Medicaid enrollees and state employees does appear in state budgets, where legislators must quantify and fund them with taxes. University of Illinois law professor David Hyman reports that state legislators typically balked at offering this benefit to those groups because the costs were more transparent. Legislators had an easier time paying Paul when the costs were hidden from Peter.
Using mandates and other regulations to keep redistributionist schemes off-budget is what 19th-century Italian economist Amilcare Puviani called a “fiscal illusion.” Economist James Buchanan explains, “fiscal illusions…have the effect of making taxpayers think that the taxes to which they are subjected are less burdensome than they actually are.”
Not Just Democrats
Both political parties use all sorts of fiscal illusions to deceive voters. Deficit spending, the Social Security trust fund, and the Medicare trust fund are fiscal illusions with bipartisan pedigrees. Republicans and Democrats use fiscal illusions to hide the largest financial costs of armed conflict (veterans’ benefits). They collude to hide what economists call the “deadweight loss” of taxation. While deadweight losses constitute a large share of the total cost of each party’s spending priorities – one estimate puts the deadweight loss associated with the PPACA at $229 billion – the CBO never includes this cost when evaluating legislation. George W. Bush’s administration literally threatened to fire Medicare’s non-partisan chief actuary if he went public with his cost projections for the Medicare drug program Bush was trying to get through Congress. Every major piece of legislation games the CBO’s rules for making cost projections.
What Gruber revealed, however, is when it comes to creating fiscal illusions, the PPACA is in a league of its own.

Grubergate Part 2: Gruber Admits ObamaCare Is One Giant Deception From Beginning To End

Michael F. Cannon

Contributor

I blog about health, freedom, and other uncertainties.

When health economist and Obama advisor Jonathan Gruber said the Patient Protection and Affordable Care Act passed only because of a “lack of transparency” and “the stupidity of the American voter,” he did more than insult millions of people. He admitted (1) if voters had understood what the PPACA does, the opposition would be so great that it would not have passed because even Democrats would have abandoned it, (2) the law’s authors knew this, and (3) because of this, they consciously sought to deceive voters about the enormous taxes the law imposes on millions of Americans, both at the law’s inception and at every turn during the public debate. In short, Gruber admitted ObamaCare is and has always been one giant deception from beginning to end, and its architects achieved by deception what they could not have achieved honestly.

Jonathan Gruber, an economics professor at Massachusetts Institute of Technology (MIT) and a consultant on the drafting of the Affordable Care Act legislation known as 'Obamacare,' testifies alongside Marilyn Tavenner, Administrator of the Centers for Medicare and Medicaid Services at the Department of Health and Human Services, during a US House Committee on Oversight and Government Reform hearing on Capitol Hill in Washington, DC, December 9, 2014. AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

Gruber admitted all this with just a few sentences in response to a suggestion that the law’s taxes and subsidies should have been made more transparent:

You can’t do it, politically. You just literally cannot do it…
This bill was written in a tortured way to make sure [the Congressional Budget Office] did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. Okay? So it’s written to do that. [If] you made explicit that healthy people pay in and sick people get money, it would not have passed.

Let’s take the last sentence first.
“Healthy People Pay In And Sick People Get Money”
As I mentioned in my last post, the centerpiece of the law is its community-rating price controls, which force insurers to raise premiums for the healthy in order to reduce them for the sick, and therefore create a fundamentally non-transparent form of redistribution.

Jonathan Chait writes:

Gruber was surely referring to the non-transparent mechanism of regulating insurance companies, causing them to charge less to the sick and more to the healthy, without Congress having to carry out those transfers through direct taxes…
Suppose Congress had decided not to regulate insurers but instead charged higher taxes to healthy people, and wrote checks directly to sick people. People would have hated it…

Unlike transparent taxes and transfers, community rating hides from millions of people the fact that they are net losers, and hides from millions more the amount of their losses.
To keep people from avoiding those hidden taxes, the PPACA’s architects included an individual mandate, which requires healthy people to pay either community rating’s hidden tax or a penalty. (An individual mandate is so effective at hiding the law’s taxes, Gruber was able to persuade President Obama to endorse it after Obama opposed it in his 2008 presidential campaign.) And to hide the cost of those premiums from those who are most price-sensitive, they offered premium subsidies to low- and moderate-income households. Even then, they made the subsidies appear to be “tax credits” even though they are plain old government spending.
Community rating, the individual mandate, and the premium subsidies form the legs of ObamaCare’s “three-legged stool.” Gruber admitted the reason the PPACA’s architects chose this model was that it hides from voters both whether they are a “Peter” and the extent to which they are being robbed.
“If CBO Scored The Mandate As Taxes, The Bill Dies”
That’s not all. Gruber also acknowledged the PPACA’s architects devoted considerable energy to preventing the Congressional Budget Office from exposing their deception.
When President Clinton proposed an individual mandate in 1993, the CBO determined the mandate was in fact a tax because it would use the sovereign power of the federal government to force people to spend their money how the government wanted. This was hardly strange. Many left-leaning economists, including advisors to President Obama, have likened an individual mandate to a tax. The CBO determined that because the mandate would essentially turn all private health insurance into a compulsory government program, the agency counted all private-insurance premiums paid to comply with the mandate as federal revenues, and counted all private-sector insurance claims as federal spending. When the CBO decided to show how much of the economy President Clinton’s Health Security Act would let the federal government control, it exposed the full cost of the bill. As Ezra Klein wrote, it “helped kill the bill.”
In 2009, Klein warned that if the CBO did the same thing again, it “would kill health reform.” The PPACA’ authors therefore crafted the bill, Gruber informs us, “in a tortured way to make sure CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies.”
This was a great source of frustration for a few critics of the bill, including me. In 2009, I explained (and even furnished proof) that “congressional Democrats have very carefully hidden more than half the cost of their health care bills,” by gaming the CBO’s amorphous and arbitrary rules for when the agency would count private health insurance premiums as tax revenue “and tailoring their private-sector mandates to avoid having those costs appear in the federal budget.” I estimated this ruse hid 60 percent of the PPACA’s cost; the actual cost wasn’t $1 trillion, but $2.5 trillion. I called the Democrats’ strategy “the biggest fiscal obfuscation in the history of American politics.” I explained how arguments against including those costs in the federal budget are absurd. I maintained a vigil that I hoped would shame the CBO into scoring the bill honestly, to no avail. Gruber confirmed that we critics were correct.
On behalf of the PPACA's architects, Gruber admitted an informed electorate would have prevented the PPACA from passing, so he and others deliberately tried to keep voters uninformed or misinformed.

Grubergate Part 3: Gruber Embraces Deception Where Needed To Achieve Universal Coverage

What’s most remarkable to me about Gruber’s “stupidity of the American voter” video is that he embraces deception when necessary to achieve his political goal of universal coverage. "Look," he responded to his colleague Mark Pauly, "I wish Mark was right that we could make it all transparent, but I’d rather have this law than not…Yeah, there’s things I wish I could change, but I’d rather have this law than not.” I don't know how to avoid the conclusion that, while Gruber believes honesty to be a virtue, he would rather be dishonest than not achieve universal coverage.

If that seems too harsh, answer this: would the Jonathan Gruber in the following video prefer that PPACA supporters deceive people and win or be transparent and fail?

Gruber’s grudging endorsement of deception brought to mind two episodes from 2009.

Gruber v. Gruber On Whether The Individual Mandate Is A Tax
The first was a debate I had with Gruber in September of that year. George Stephanopoulos had just asked President Obama, “Under this [individual] mandate, the government is forcing people to spend money, fining you if you don’t. How is that not a tax?” Obama responded, “I absolutely reject that notion.”

Obama’s denial that the individual mandate is a tax put him at odds with prominent left-leaning economists, including some of his own advisers. Uwe Reinhardt, Larry Summers, Sherry Glied, and even the Congressional Budget Office had all likened the individual mandate to a tax.

The day after Obama’s denial aired, Gruber and I appeared on PBS’s Newshour to debate whether the individual mandate is a tax.
If Gruber were trying to inform PBS viewers and bring transparency to the debate, he might have quoted Princeton health economist Uwe Reinhardt: “[Just because] the fiscal flows triggered by mandate would not flow directly through the public budgets does not detract from the measure’s status of a bona fide tax.” He might have quoted Larry Summers: “Essentially, mandated benefits are like public programs financed by benefit taxes.” He even could have quoted his own Public Finance and Public Policy textbook, where he writes (page 314) that low-risk consumers subject to such a mandate “could view themselves as essentially being taxed.”
Instead, he told PBS viewers pretty much the opposite of what he tells economic students, his publishers, and his peers: “Let's be clear. The mandate itself is not a tax.” (Go to 7:20 in this video, which I unfortunately cannot embed here.)
Gruber v. Economics On The “Cadillac” Tax
The second episode was a Washington Post oped from December 2009, in which Gruber argued for the “Cadillac tax” on high-cost employer-sponsored health plans. The lengths to which he goes to disguise the fact that this is a tax on workers is just breathtaking.

1. Gruber claims the fact that workers don’t pay income or payroll taxes on the health insurance they receive as compensation from their employers means, “Taxpayers are literally sending [workers] money.” Umm, no it doesn’t. It means the IRS is taking less money from workers.
2. Gruber writes that when Congress imposes the Cadillac tax on a firm, “we have not taxed [the] firm.” This is silly. The firm’s tax payments increase and, coincidentally, federal revenues increase by the same amount.
3. When the Cadillac tax taxes health benefits, Gruber writes, it will result in “extra annual earnings” for workers. Umm, no it won’t. Firms may or may not respond to Congress taxing health benefits by shifting compensation from health benefits to wages, causing wages to rise. Either way, the worker’s tax liability rises and her total compensation falls.
4. Finally, Gruber even claimed the Cadillac tax “is not a tax.” One can argue the Cadillac tax is a good tax. Or that it reduces the distortions created by an existing tax preference. Or that it is good health policy. But no honest economist can argue that a government-imposed excise on previously untaxed economic transaction is not a tax.

I wish there were some mitigating context that made these claims even remotely defensible.
Gruber Is Not A Whistleblower
A colleague lamented to me that Gruber is basically a whistleblower, and if the flak he is receiving is what happens to people who tell the truth, we’ll get a lot less truth-telling. I disagree.
A whistleblower takes the side of the marks. From 2009 to the present day, Gruber has been cooling the marks out. Though I am glad he occasionally comes clean, it always seems to be in the manner of “check out how clever we were in deceiving you.” I don’t think he’s ever said, “We deceived you, it was wrong, and it should not have happened.”
Contrast Gruber’s grudging acceptance of the dishonesty used to sell the PPACA to what former Rep. Barney Frank (D-MA) had to say about such dishonesty:

But frankly, [Obama] should never have said as much as he did, that if you like your current health care plan, you can keep it. That wasn't true. And you shouldn't lie to people. And they just lied to people…
He should have said, “Look, in some cases the health care plans that you've got are really inadequate, and in your own interests, we're going to change them." But that's not what he said…
Any smart political adviser would have said, “Don't lie to people, because you're gonna get caught up in it and it's gonna have this tsunami that you now have.” My political motto, very simple. I have always told the truth, and nothing but the truth. But I don't volunteer the whole truth in every situation.

Rather than follow Frank’s maxim or say the deception never should have happened, Gruber rationalized the deception. That is why Gruber is the subject of an ongoing feeding frenzy and Frank is not.
Bless his heart, Ezra Klein reads Gruber’s remarks as showing Gruber opposed the deceptions that went into passing the PPACA:

I know exactly what he's trying to say here: he was really, really frustrated by Washington's games. He was really annoyed at politicians framing things and writing legislative language to support their press releases rather than the final law…And he's got little patience for Washington's tendency to take clean, straightforward policies and complicate them in the name of politics…He tried to make what was in [the bill] clearer and more known than it was.

If that were even remotely true, the words “tortured,” “lack of transparency,” “mislabeling,” “ignorance,” “base exploitation of the economic ignorance of the American voter,” and “stupidity” would have passed Gruber’s lips in 2009, not 2013. He would have written opeds like this one in 2009 and 2010 to challenge the deceptions that (Klein thinks) annoyed him so. He didn’t. In our long and wide-ranging Newshour discussion, he had ample opportunity to explain how community rating decreases premiums for some but increases premiums for others, or that the individual mandate, as he tells his students, is "essentially" a tax. Instead, his descriptions of those features of the law were calculated to hide the truth.
My colleague was right about one thing. Gruber is being held to account for deceptions perpetrated mostly by others. At this point, the only people who can let him off the hook are Democratic elected officials, who can do so by coming clean themselves.
Update: In this post from March 2012, Avik Roy explains how before the PPACA became law, Gruber claimed it would reduce premiums, then after it became law Gruber admitted it would increase premiums.
Update #2: Also in 2012, Bryan Caplan reviews Gruber's popular attempt to explain the PPACA, writing, "Given my interest in health economics and graphic novels, I was initially hopeful about Jonathan Gruber's graphic novel, entitled Health Care Reform: What It Is, Why It's Necessary, How It Works.  But in all honesty, the book is awful.  Gruber crafts his argument like a salesman, not an economic educator. He's careful to avoid outright mistakes, and makes a couple of awkward disclosures. Yet he omits a long list of crucial, damaging points."

Grubergate Part 4: Gruber Shows Why Chief Justice Roberts Was Wrong On ObamaCare

In his “stupidity of the American voter” video, Jonathan Gruber inadvertently demonstrated that in NFIB v. Sebelius, Chief Justice John Roberts gutted one of the Constitution’s key limitations on congressional power.

The Patient Protection and Affordable Care Act requires most Americans to purchase a minimum level of health insurance or pay a “penalty” to the IRS. The law explicitly claims the U.S. Constitution authorizes Congress to impose that individual mandate via the power it gives Congress to regulate commerce among the states.
In NFIB v. Sebelius, five Supreme Court justices, including Roberts, found the individual mandate exceeds Congress’ authority under the Commerce Clause. But while the other four justices voted to strike down the individual mandate and the entire PPACA with it, Roberts demurred.
Roberts argued that if the individual mandate’s penalty for not purchasing health insurance “can be interpreted as a tax,” then Congress could have the power to impose the mandate under its taxing power. It doesn’t matter whether Congress used the “magic words” to signal which constitutionally granted power it was using, Roberts wrote. All that matters is whether any of Congress’ enumerated powers gives Congress the authority to do what it did.

Roberts then reasoned that, if one ignores the actual words Congress used when crafting the individual mandate, the penalty for non-compliance with the mandate could be seen as a constitutional use of Congress’ taxing power. Conventional wisdom holds that Roberts then upheld the mandate and the PPACA as constitutional. It is more accurate to say he declined to strike them down because Congress could have enacted a similar law that would have been constitutional.

The “magic words” doctrine can be a sensible approach to deciding whether Congress is acting within its enumerated powers. But the enumeration of Congress' powers is not the only constraint the Constitution imposes on Congress. It also contains provisions that restrain Congress from using its enumerated powers in certain ways and in certain circumstances. Arguably the most important constraint the Constitution places on how Congress may use its enumerated powers is political accountability. The Constitution limits Congress’ legislative powers by providing that if voters don’t like how their members of Congress have been using those powers, the voters can toss them out.
When Roberts applied the “magic words” doctrine in NFIB, he ignored and therefore gutted the Constitution's political-accountability constraint, which had prevented Congress from creating the mandate via Congress' taxing power. Jonathan Gruber's admission that the PPACA's authors crafted it “in a tortured way” to prevent the individual mandate from being seen as a tax confirms that if they had grounded the mandate in the taxing power, more Democratic members of Congress would have voted against it and the bill would not have passed. Gruber confirmed that the constitutional constraint of political accountability prevented Congress from using its taxing power to create the mandate.
It would be difficult to imagine a fact pattern that presents a clearer example of the constitutional constraint of political accountability preventing Congress from using an enumerated power. As PBS’s Gwen Ifill explains in the Gruber-Cannon Newshour video I discussed in a previous post, the Senate authors of the PPACA originally called the individual-mandate penalty an “excise tax.” When they realized they were bumping up against the political-accountability constraint, they dropped any mention of taxes from that provision. They described the consequence for non-compliance with the mandate as a “penalty” and cited the Commerce Power as the source of Congress’ authority to impose both the mandate and the penalty. As Gruber admits, they also carefully crafted the bill so the CBO would not count compliance with the mandate as a tax.
Roberts was so focused on whether Congress was reaching beyond its enumerated powers, he failed to notice the constraint the Constitution imposes on how Congress can use those powers, a constraint that proved binding in this case. By upholding the mandate as a constitutional use of the taxing power, Roberts thus gutted perhaps the most important constraint the Constitution imposes on Congress. That made Roberts an active partner in enabling the PPACA's architects to evade the restraints the Constitution imposes on Congress.

Grubergate Part 5: How King v. Burwell Would (Finally) Bring Transparency To ObamaCare

“Grubergate” involves two different groups of videos/recordings of MIT health economist and ObamaCare architect Jonathan Gruber. One group consists of videos where he explains that various deceptions that went into crafting and selling the Patient Protection and Affordable Care Act, and explains the scam worked because voters are “too stupid to understand the difference.” The second group consists of two recordings in which Gruber acknowledges the PPACA offers premium subsidies only to residents of states that help implement the Act by establishing a health-insurance Exchange. To my knowledge, no one has remarked upon the connection between these two groups of videos.

When Gruber would tell audiences the PPACA passed because of a “lack of transparency” and “the stupidity of the American voter,” he meant that he and other architects of the law constructed a network of regulations designed to obscure who was being taxed and how much. Those regulations push most of the law’s taxing and spending off-budget by mandating that individuals and business spend their money on the government’s priorities themselves, rather than hand the money over to the IRS for the government to spend.
One of the most important ways the PPACA hides its costs is by offering premium subsidies (nominally, “tax credits”) to low- and middle-income Americans who purchase coverage through the law’s health-insurance Exchanges. Those subsidies shield Exchange enrollees from the Act’s hidden taxes by shifting much of the cost of coverage from the premium payer to the taxpayer.

King v. Burwell Would Let The Sun Shine In
Enter King v. Burwell, a case soon to be heard by the Supreme Court. The King plaintiffs claim the PPACA authorizes those subsidies only, quoting the Act, “through an Exchange established by the State” – not, as the Obama administration claims, in the 36 states with Exchanges established by the federal government.
A victory for the King plaintiffs would cause Exchange subsidies to disappear in two thirds of the country and free more than 57 million Americans from illegal taxation. In other words, it would lend transparency to the PPACA by revealing to millions of Exchange enrollees the full cost of the law’s mandates and regulations. The very idea terrifies advocates of universal coverage.

Gruber v. Gruber On King v. Burwell
Back in 2012, Gruber told audiences that the King plaintiffs’ interpretation is indeed how the Act works: “if you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits.”

Sometime between then and now, however, when it became apparent that 36 states would fail to establish Exchanges, this feature of the PPACA became politically problematic.
Gruber now insists his prior interpretation of the statute was “screwy…nutty…[and] stupid.” He calls the statutory language imposing this condition a “typo.” He says his remarks the verbal equivalent of a typo – a “speak-o.” Those explanations didn’t hold water before we knew Gruber condones deception in the service of universal coverage. They certainly don’t hold water now.

Grubergate Part 6: Deny, Deny, Deny

After Jonathan Gruber admitted ObamaCare is just one gigantic deception, the law’s other architects understandably tried to distance themselves from him, even as they tried to keep the deception going. President Obama and former House Speaker Nancy Pelosi (D- CA CA +0%) were each caught deceiving the public while in the process of denying they had deceived the public.

Asked for comment, Obama disputed Gruber’s characterization of the PPACA. He claimed every provision of the law was “fully transparent” and he never, ever misled anybody:

Q: "Did you mislead Americans about the taxes, about keeping your plan, in order to get the bill passed?"
Obama: "No. I did not."

Gee, I’m satisfied. I guess former Rep. Barney Frank (D-MA) was wrong when he said Obama "just lied to people" when he promised over and over again, “if you like your health plan, you can keep your health plan."

Obama also dismissed Gruber as “some adviser who never worked on our staff.” Never mind that Obama paid Gruber $400,000 of taxpayer money to help his administration “develop proposals” for health care reform. (That's a lot more than Obama pays his staff). Or that according to the Washington Post, Obama “summoned” Gruber to strategy meetings. Or that, according to the New York Times, Obama“lent [Gruber] to Capitol Hill to help Congressional staff members draft the specifics of the legislation.” Or that Gruber himself says, “There are few people who worked as closely with Obama administration and Congress as I did.” Or that Obama said, “I have stolen ideas from [Jonathan Gruber] liberally,” years before they collaborated on the PPACA.
Former House Speaker Nancy Pelosi (D-CA) flatly denied knowing Gruber: "I don't know who he is. He didn't help write our bill."

Never mind that she cited Gruber’s favorable analysis of her bill in 2009.

I can’t say that Obama or Pelosi were deliberately lying. But this Reason magazine cover seems less and less like click-bait and more like a rule of thumb.

In terms of perpetuating the deception, Gruber himself gave a virtuoso performance on a Boston news program. First, he said he his “stupidity of the American voter” remarks from 2013 pertained only to how the PPACA distributes subsidies via tax code, even though that is clearly not the case. Second, even as he apologized for how he disrespected voters, he defended the use of deception when honesty won’t get the job done. Third – and this was truly magnificent – even after admitting he and others deliberately deceived voters about the PPACA, he warned that the “master strategy of the Republican party…is to confuse people enough about the law so they don’t understand” how it works. (Go to 6:06 in the below video.)

He may as well have done a mic drop right on the desk.

Grubergate Part 7: Many ObamaCare Supporters Are (Still) Among The Deceived

When Jonathan Gruber and other architects of the Patient Protection and Affordable Care Act crafted the law to create, in Gruber’s words, a “lack of transparency,” they weren’t just preying on the ignorance of voters. Many ObamaCare supporters, in trying to explain away his comments, revealed they still don’t understand the extent of the deception.

The New York Times’ Neil Irwin thinks the deception was merely about cloaking subsidies in the language of tax cuts, and whether one calls the mandate penalty a fine or a tax. Yet when Gruber said, “This bill was written in a tortured way to make sure [the Congressional Budget Office] did not score the mandate as taxes” because “If CBO scored the mandate as taxes, the bill dies,” he was referring not just to the penalties for non-compliance but also to the premium payments made to comply with the mandate.
Former Obama health policy advisor Neera Tanden, now head of the Center for American Progress, wrote, “Gruber was not…the architect of the health-care law” and the idea that its authors deliberately hid its effects is “simply incorrect” because community-rating was a transparent part of the law from the beginning. Igor Volsky of Talking Points Memo echoed Tanden almost verbatim, adding that Gruber’s comments were “untrue” and community rating's "cross-subsidization” was a large part of the debate. Tanden adds, “Whether [CBO] viewed the mandate as a ‘tax’ had no impact on their analysis; the economic effect is the same regardless of the name.”


Tanden and Volsky are wrong on each count. First, Gruber was indeed an architect of the law, not least because he convinced President Obama to reverse his position on an individual mandate. Second, Gruber admitted the PPACA's architects chose community rating because it hides whether and to what extent each individual is a net winner or loser. Tanden and Volsky would have us believe the debate was transparent because supporters acknowledged the method by which they made the law's costs opaque. Third, neither Gruber nor the law's critics claimed that scoring the mandate as a tax would alter the CBO’s projections of the bill’s economic effects. Critics hoped (and supporters feared) it would reveal the coercive nature of the mandate, how much of Americans’ incomes and health care decisions the bill let the federal government control, and thus the full cost of the bill.
The New Republic’s Jonathan Cohn says the process was transparent because the question of whether to score the mandate as a tax was “discussed widely.” Cohn seems to think that if people debated whether the process should be transparent, that means the process was transparent. Never mind that the pro-transparency side lost the debate, or that the “debate” he recalls was little more than PPACA supporters high-fiving each other for their victory over honest government.

Cohn even knows that transparency lost. Like Gruber, he acknowledges the PPACA’s opaque regulatory scheme was necessary because a more transparent law would not have passed. Like Gruber, he dismisses as “semantic” the debate over whether these premium payments are a tax. If it's only a semantic question, that means Cohn agrees what those mandated premium payments are, and only disagrees about whether we should call them what they are.
As those who were in on the scam hoped, employing community rating and winning that "semantic" debate kept important information from reaching voters. Other critics and I still claimed the mandate was a tax and that the cost of the bill was two and a half times it stated cost. But without the non-partisan CBO to back us up, Brian Beutler and the like could dismiss such claims as “hysterical Republican whoppers,” safe in the knowledge that our accurate interpretation of the bill would never get traction.
As far as I know, Ron Fournier is the only supporter of universal coverage who has failed to perpetuate the deception:

He called you stupid. He admitted that the White House lied to you. Its officials lied to all of us—Republicans, Democrats, and independents; rich and poor; white and brown; men and women.
Liberals should be the angriest. Not only were they personally deceived, but the administration's dishonest approach to health care reform has helped make Obamacare unpopular while undermining the public's faith in an activist government. A double blow to progressives.

Grubergate Part 8: Where To Go From Here?

When I began this series of posts on Jonathan Gruber admitting that he and other ObamaCare architects wrote the Patient Protection and Affordable Care Act to create a “lack of transparency” and hoodwink American voters, I wrote:

These posts have been difficult to write. Gruber has always been generous and gracious with me. As you read, bear in mind he is a target of criticism because he has been more honest than the PPACA’s other architects. If you are one of his critics and cannot stop at polite criticism, just leave him alone.

As much as I like Jonathan Gruber, however, the polite criticism and congressional investigations should continue.

Regarding congressional investigations, when recordings emerged of Gruber telling audiences the PPACA’s premium subsidies are available only through state-established Exchanges, I wrote:

Gruber’s comments raise questions about whether this (correct) interpretation of the law was also understood by the members of Congress and administration officials Gruber advised.

Congress’ oversight committees should investigate whether members of Congress, congressional staff, or Obama administration officials communicated that understanding of the law to Gruber, or vice versa.
Furthermore, when Gruber appears before Congress on December 9, members of the oversight committee should have him walk through all the ways the PPACA creates the “lack of transparency” he mentioned.  It’s time to pull back the curtain, and no one can do it better than he can.
Bring Transparency To The Congressional Budget Office
Congress should also take steps to make the CBO’s legislative cost-projections more comprehensive, its scoring conventions tougher to game, and the agency itself more transparent.
First, Congress should demand an honest accounting of the full cost of the PPACA. They should direct the Congressional Budget Office to score the PPACA as it scored President Clinton’s Health Security Act, with all mandated private-sector health insurance premiums counted in the federal budget as revenues, and all claims and administrative costs counted as federal expenditures.
Second, Congress should direct the CBO to report the full cost of all legislation. That means estimating the full cost of all private-sector mandates. As I wrote in 2009:

Federal law requires only that the CBO say whether the private-sector mandates’ cost would exceed a specified threshold, now set at $139 million. The agency has affirmed that the [PPACA’s] mandates would “greatly exceed” that threshold.
That is quite an understatement — the mandates could exceed that threshold by a factor of 10,000.

It also means Congress should direct the CBO to estimate the “deadweight loss of taxation” that imposed by each piece of legislation. Projecting the cost of private-sector mandates and deadweight losses will be an imprecise science. But the only thing more irresponsible than producing imprecise estimates is producing no estimates of these costs at all.
Third, Congress should make the CBO’s methods of scoring legislation more transparent, and thus harder to game, such as by open-sourcing the agency.
Finally, whether Gruber’s honesty sparks a much needed re-evaluation of the PPACA depends on how many Democrats will follow Ron Fournier’s lead and denounce the deceptions and arrogance that went into passing that law, and are still being employed in its defense. Sen. Charles Schumer’s admission that passing the law was a mistake is a welcome start. It remains to be seen how many Democrats possess such courage.