Obamacare Architect Jonathan Gruber's Self-Defeating Strategy to Sell the Health Care Law



For a sense of exactly how the deceptions that Obamacare architect Jonathan Gruber has described played out in the selling of the law, it's worth reading Jake Tapper's piece at CNN on Gruber, Obama, and the health law's Cadillac Tax.

Tapper points to a statement by President Obama at a July 2009 health care townhall on the reasoning behind the tax, and then juxtaposes it with a recently unearthed remark by Gruber indicating that the purpose of the tax is not what Obama described. In fact, it's pretty much the opposite. 

At a town hall meeting on health care on July 23, 2009 in Shaker Heights, Ohio, Obama explained that the thinking of the Cadillac tax was to target plans that spend unnecessarily and excessively, thus driving up health care costs, such as a $25,000 plan, "so one that's a lot more expensive and a lot fancier than the one that even members of Congress get."

The thinking, Obama explained, was that "maybe at that point what you should do is you should sort of cap the exclusion, the tax deduction that is available, so that we're discouraging these really fancy plans that end up driving up costs."

The President at that point hadn't yet signed off on a Cadillac tax (he would eventually) but he did make the pledge: "what I said and I've taken off the table would be the idea that you just described, which would be that you would actually provide—you would eliminate the tax deduction that employers get for providing you with health insurance, because, frankly, a lot of employers then would stop providing health care, and we'd probably see more people lose their health insurance than currently have it. And that's not obviously our objective in reform."


Gruber's explanation of the thinking was a little bit different. To be precise, it was the opposite of what Obama said.

Gruber starts by noting that economists really don't like the tax subsidy for employer-provided health insurance, that it's terrible public policy, but that politically it's very difficult to end. Here's how Tapper describes the rest of what Gruber says. 

Gruber said the only way those pushing for Obamacare could get rid of the tax subsidy for employer provider health insurance was to tax the more generous, or Cadillac, plans—"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."

The second way was have the tax kick in "late, starting in 2018" and have its rate of growth tied to the consumer price index instead of to the much higher rate of medical inflation. Eventually, the 40% tax on the more expensive plans would impact every employer-provided insurance plan.

"What that means is the tax that starts out hitting only 8% of the insurance plans essentially amounts over the next 20 years essentially getting rid of the exclusion for employer sponsored plans," Gruber said. "This was the only political way we were ever going to take on one of the worst public policies in America."

As Tapper writes, this is exactly what Obama promised had been "taken off the table."

This is an issue on which Gruber can presumably speak with some authority. By Gruber's own account, he was in the room with President Obama when the Cadillac tax was designed, and that it was designed in order to avoid the political backlash that Obama believed was sure to accompany any effort to get rid of the employer tax exclusion in a straightforward manner. 

Now, as it happens, I think Gruber was right on the merits of the subsidy for employer benefits: It's bad policy.

But Obama didn't really make the case that it was bad policy. Instead, he said that ending the employer tax break was something he wouldn't do, and that he didn't support ending it because doing so would lead to negative consequences. 

And then, behind closed doors, he said the more or less the opposite: He agreed that it was a problem, and that it needed to go, and worked with Gruber to devise a mechanism that would eventually end it or significantly reduce its effects. 

Even if you like the result, even if you agree that the tax exclusion was a problem that needed to be addressed, this is not a good policy process. It's built on manipulation and obfuscation rather than on straightforward argument about the merits of a change, and it ends up producing workaround policies that are made as much to conceal their purpose as to produce a desired effect. It's not about convincing the public; it's about misleading them and hoping they don't catch on.

And, as a result, it's the sort of strategy that inevitably backfires, even when it "works" in the sense that it produces a legislative win. It attempts to avoid one sort of political backlash, but ends up creating another. It's self-defeating. 

With Obamacare, the results are plain to see. If you want to understand why public support for the health law is so low, this sort of thing is one of the reasons why. People generally don't like processes designed to mislead them, and with Obamacare, they feel misled because, well, they were.