BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

ACA Architect: 'The Stupidity Of The American Voter' Led Us To Hide Obamacare's True Costs From The Public

Following
This article is more than 9 years old.

You’ve got to hand it to MIT economist Jonathan Gruber. The guy dubbed the “Obamacare architect” is a viral YouTube sensation. A few months back, he was caught on tape admitting that Obamacare doesn’t provide subsidies for federally-run insurance exchanges; it's now the topic of a new case before the Supreme Court. Today, new video surfaced in which Gruber said that “the stupidity of the American voter” made it important for him and Democrats to hide Obamacare’s true costs from the public. “That was really, really critical for the thing to pass,” said Gruber. “But I’d rather have this law than not.” In other words, the ends—imposing Obamacare upon the public—justified the means.

The new Gruber comments come from a panel discussion that he joined on October 17, 2013 at the University of Pennsylvania’s Leonard Davis Institute of Health Economics. He was joined on the panel by Penn health economist Mark Pauly. Patrick Howley of the Daily Caller was the first journalist to flag Gruber’s remarks, which were unearthed by Rich Weinstein.

In fairness to Gruber, American voters are not the only people whose intelligence he questions; elsewhere in the discussion, he describes New York Sen. Chuck Schumer (D.) as someone who "as far as I can tell, doesn't understand economics" and calls a staffer for Sen. Olympia Snowe (R., Maine)—presumably William Pewen—an "idiot."

Representatives of the Leonard Davis Institute tried to pull the video of Gruber's remarks, but they were too late. Phil Kerpen and others had already clipped them for public consumption.

Obamacare’s opacity was a deliberate strategy

Gruber made an argument that many of Obamacare’s critics have long made, including me. It’s that the law’s complex system of insurance regulation is a way of concealing from voters what Obamacare really is: a huge redistribution of wealth from the young and healthy to the old and unhealthy. In the video, Gruber points out that if Democrats had been honest about these facts, and that the law’s individual mandate is in effect a major tax hike, Obamacare would never have passed Congress.

“Mark [Pauly] made a couple of comments that I do want to take issue with, one about transparency in financing and the other is about moving from community rating to risk-rated subsidies. You can’t do it politically. You just literally cannot do it, okay, transparent financing…and also transparent spending.” Gruber said. “In terms of risk-rated subsidies, if you had a law which said that healthy people are going to pay in—you made explicit that healthy people pay in and sick people get money, it would not have passed, okay. Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really, really critical for the thing to pass…Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”

Gruber also points out that Obamacare’s individual mandate—the provision that requires most Americans to buy government-approved insurance, or pay a fine—was described in the law as a “penalty” instead of as a “tax” in order to hide the mandate’s effects. “I mean, this bill was written in a tortured way to make sure CBO did not score the [individual] mandate as taxes,” said Gruber. “If CBO scored the mandate as taxes, the bill dies. Okay, so [the law is] written to do that.”

To a large degree, the tactic of opacity worked. Not only did Obamacare get passed, but its complex system of cross-subsidies attracted less notice on the Right than did the law’s tax hikes and spending increases. But what progressives figured out—and conservatives are just learning—is that government regulation of health insurance can serve as yet another way to redistribute money from one group to another.

In Louisiana, Obamacare hiked rates for young men by 108%

If you look at the Manhattan Institute’s Obamacare cost map—in which we analyzed how the law’s health insurance regulations affect people of different ages and genders—you’ll see that for most of the country, young people who shop for coverage on their own have far steeper gross insurance costs under the law than they did before.

For example, in Louisiana—home to a hotly contested Senate race between incumbent Mary Landrieu (D.) and Rep. Bill Cassidy (R.)—the underlying cost of insurance increased by 108 percent for 27-year-old men, and 46 percent for 27-year-old women.

This doesn’t count as a tax increase for official purposes. But for the 27-year-old who is now being forced to pay for costlier coverage, it has basically the same effect as a tax. But age-based community rating attracted almost no attention in the run-up to passage of the health care bill.

Repeal age-based community rating

It’s for this reason that I’ve argued that the new Republican Senate majority should repeal age-based community rating, or modify it considerably. Under Obamacare, insurers can only charge their oldest customers three times as much as they charge their youngest ones. Because 64-year-olds consume about six times as much health care as 21-year-olds, this provision has the net effect of jacking up prices for the young.

That is to say, let’s replace what wonks call the “3:1 age band” with a “6:1 age band” or get rid of age bands altogether. That way, young people—the people who’ve been most harmed in the Obama economy—can once again pay a fair price for health insurance. There’s no better way for Republicans to start engaging younger voters—and to take a principled stand against Obamacare’s obfuscations.

Also on Forbes:

*    *    *

UPDATE 1: Keith Hennessey critiques the dishonest pattern of Congress enacting non-transparent methods of financing health care subsidies. Richard Weir of the Boston Herald reached out to Gruber, but Gruber repeatedly replied "I have no comment."

UPDATE 2: After 24 hours, and presumably some conversations with PR types, Gruber came out of hiding and attempted to explain his remarks on MSNBC's Ronan Farrow Daily:

David Weigel has a piece on the "mild-mannered investment advisor," Rich Weinstein, who has been responsible for highlighting the Gruber videos.

UPDATE 3: Rich Weinstein has released two more Gruber videos, in which the economist boasts of Obamacare's "exploitation of the lack of economic understanding of the American voter."

AVIK’S NEW HEALTH-REFORM PLAN, Transcending Obamacare: A Patient-Centered Plan for Near-Universal Coverage and Permanent Fiscal Solvency, is available online. Follow @Avik on Twitter, Google+, and YouTube, and The Apothecary on Facebook. Or, sign up to receive a weekly e-mail digest of articles from The Apothecary.

INVESTORS’ NOTE: The biggest publicly-traded players in Obamacare’s health insurance exchanges are Aetna (NYSE:AET), Humana (NYSE:HUM), Cigna (NYSE:CI), Molina (NYSE:MOH), WellPoint (NYSE:WLP), and Centene (NYSE:CNC), in order of the number of uninsured exchange-eligible Americans for whom their plans are available.