America completely missed the point behind Grubergate
It is shocking how one man’s words and the reactions to them can illustrate everything wrong with both sides of the healthcare debate.
But that’s exactly what happened when several videos featuring Jonathan Gruber, an Obama adviser who helped write the landmark Affordable Care Act, were released. At a conference a little over a year ago, Gruber said the law’s passage through government was defined by a “lack of transparency” and relied on the “stupidity of the American voter” to gain passage. More specifically though, he said the “Cadillac tax” on expensive employer-provided health insurance only was included because voters were “too stupid to understand it.”
Gruber’s comments are offensively stated, to be sure. His comment about transparency is largely off-base (public hearings were routinely held). But conservatives who have added those remarks as ammo to the “repeal Obamacare” movement, and Democrats who have pretended they don’t even know who Gruber is, have both missed an important message.
The big lesson of the “Grubergate” fiasco is not that the Affordable Care Act should be repealed, or that it’s a wonky far left policy intended to radically revamp the health care market. It’s the lesson that economists like Gruber tried to tell Democrats all along: The Affordable Care Act hasn’t gone far enough. Instead, the actual response to the videos have totally obscured the real issue, forgoing the opportunity for a teachable moment.
Here are the facts. Conservatives who opposed the Affordable Care Act have argued that it was needless and expensive government intervention into the health care market. What they and many others don’t realize is that this has been happening for years. The biggest example is the nearly $250 billion-a-year subsidy that the government distributes to individuals who get insurance through their employer. The subsidy comes in the form of an income tax break, because employers can write it off as an income tax, and that tax code lets you ignore it when calculating your taxable income. The big hypocrisy is that many who opposed the Affordable Care Act didn’t stand against this subsidy. There’s a reason that, in 2013 (before all of this blew up), the Washington Post called the subsidy “The huge health-care subsidy everyone is ignoring.”
According to Gruber (and many other economists), the tax break is a “regressive, inefficient and expensive tax subsidy.” The Affordable Care Act’s architects believed that replacing it with subsidies through the new exchanges and government plans would be both more efficient and less distortive. But they also realized that the subsidy would be hard to get rid of politically, so they created a tax on really expensive employer plans called “Cadillac” plans.
That’s where Gruber’s remarks come in. He pointed out that the tax does not increase with inflation writ large, meaning that as everything becomes more expensive (including medical insurance), eventually the “Cadillac tax” will be a tax on everyone’s employer-provided plan, a secret way of doing what had been advocated all along: ending the employer-provided subsidy. The problem is that this seems exactly like what President Obama said wouldn’t happen: “What I said and I’ve taken off the table would be … [that] you would eliminate the tax deduction that employers get for providing you with health insurance,” Obama had said at a town hall meeting on July 23, 2009 in Shaker Heights, Ohio.
To be fair, the Affordable Care Act does not eliminate the tax deduction. What it does is chip away at its leverage year by year, and replaces it with cheaper government options, the central goal of the law. Gruber’s comments remind us that what it should do beyond ending the subsidy and mandating that everyone be insured is explicitly offer a public option: a government-sponsored insurance plan that takes a substantial share of the insurance market. Such a proposal would force rates for private plans to go down and allow the government to bargain down the price of expensive drugs and medical treatments, a central problem with insurance in America.
Instead of criticizing Gruber’s comments on form, but embracing them in substance, Democrats like Nancy Pelosi chose to embarrass themselves by claiming of Gruber, “I don’t know who he is.” This ill-thought-out remark came despite the fact that Pelosi said a few years ago, “Our bill brings down rates, I don’t know if you have seen Jonathan Gruber’s MIT analysis.”
The Republican hounds pounced, and the entire debate has been stuck on it ever since, with various online outlets dubbing the fiasco “Grubergate.” Reasonable people who believe there is more to be done in health care, however, can take solace in the remarks made by former-common sense health care advocate and Republican Presidential candidate extraordinaire Mitt Romney several years ago: “Jonathan Gruber at MIT devoted hours and hours to an essential econometric model,” he said.
Looking past Gruber’s poorly phrased comments, let’s not forget that model and the potential it holds.
Nathaniel Haas is a junior majoring in political science and economics. His column, “State of the Union,” runs Fridays.
To those that actually read the bill, it was abundantly clear that there would be many negatives. The debate was charged by sound bites. In short, logically how can a new batch of government workers cut costs? When has that ever happened? How can thousands of new regulations make things easier for insurance companies? Is threatening jail time and threatening to revok doctor’s licenses the route we want to go with healthcare?
Democrats learned from the flame out of HillaryCare that they would have to lie about who would actually pay for Obamacare, or it would never pass.
That’s exactly what Obama did, with the main stream media carrying his water.
Democrats’ approach was to sneak a provision past “stupid”. American voters that takes away the largest individual tax deduction in IRS books, employer health premiums at 250 billion per year, and hires 16,000 IRS agents to force Americans to buy insurance. This would undoubtedly result in a “Medicaid for All” system bankrolled primarily by the middle class.
One would hope the GOP will eventually send Obama a bill that, among other things, gives the tax deduction for Heath care premiums to BOTH employer and individual policyholders to provide strong incentive to buy health care coverage. GOP has a huge mess to clean up, but at least guaranteed issue is almost certainly here to stay.
Unfortunately for Obama, a critical mass of the electorate now sees that Obamacare was quite literally the Biggest Bait and Switch in the History of the Planet.
And Hillary will be campaigning as the most politically toxic provision of all, the employer mandate, is dumping millions more who were told they could keep their plans into Obamacare. Good luck, Hillary. You are going to need it.
We know what Gruber is up to–destroy the private insurance industry and implement single-payer. When are people going to quit bowing down to big government, i.e. socialism? FOOLS!
One of the problems with the ACA, is the employer portion is called a benefit and is part of out benefits package, juse like vacation and sick days, basic life insurance, etc.
Yes, the monthly cost is doable for a lot of people, but the copay has increased in a large way that most families cannot afford to pay it, before insurance kicks in.