Why Gruber-gate Is So Devastating to Democrats

Why Gruber-gate Is So Devastating to Democrats

  • The MIT economist has a history of evasiveness and deception
  • Those same selective disclosure issues have plagued Obamacare
  • Obamacare shoppers could be in for sticker shock in year two
REUTERS/Joe Skipper

Conservatives continue to consume themselves with denunciations of MIT health care economist Jonathan Gruber. The recent unearthing of Gruber’s comments citing “the stupidity of the American voter” as a reason to keep certain elements of the Affordable Care Act hidden and opaque have led to a hailstorm of criticism, and re-ignited the Republican bid to repeal the law.

Now, few pieces of legislation were covered as intensely and with such granularity as the Affordable Care Act. I should know: While with the website Firedoglake, I scrutinized the bill practically line by line over the course of several months. If American voters wanted to learn about Obamacare, they had all kinds of resources they don’t usually have at their disposal. 

Related: Obamacare Could Face Large Numbers of Dropouts

But I’m in a unique position when it comes to Gruber. My public criticism of him goes back to 2010, when he exhibited precisely the traits of deception and evasiveness that have gotten him in trouble now. In fact, he has become an avatar of not only Obamacare, but of liberal paternalism, a caricature of the snotty know-it-all technocrat who will make decisions for people without consulting them. That some of this perspective actually shows up in the health care law is a major reason for its difficulties, and a bigger problem for Democrats going forward. 

Here’s what we were talking about in January of 2010. Gruber was a go-to source for dozens of journalists during the ACA debate. But my Firedoglake colleague Marcy Wheeler discovered that, while Gruber was talking to journalists and writing op-eds in favor of the law, he didn’t disclose that he was paid $392,600 by the Department of Health and Human Services to produce technical models that estimated the effects of changes in insurance coverage. Labeling Gruber now as an “advisor to the administration” neglects the fact that he never mentioned that relationship to many reporters

The New York Times wrote a harsh correction to an op-ed Gruber wrote for them, noting, “Had editors been aware of Professor Gruber’s government ties, the Op-Ed page would have insisted on disclosure or not published his article.” In fact, Gruber signed a contract with the Times that obligated him to disclose his consulting work, which he neglected to do. He also didn’t disclose to the New England Journal of Medicine, another publication with a formal disclosure policy.

In response, Gruber claimed that his stated beliefs were consistent throughout, regardless of his affiliation with HHS. But the point is that politicians used his quotes to tout the health care law by explicitly portraying him as an independent expert. The DNC sent 71 emails highlighting Gruber’s analysis without mentioning his work for HHS. On the floor of the Senate, Bob Casey defended his position by citing “Dr. Gruber at MIT, not my words, not the words or the analysis of some senator or House member on one side of the debate or the other.”

Related: Gruber Proves Obamacare Was Built by Elites for ‘Stupid People’

Gruber was virtually the only source cited in discussion of the “Cadillac tax” on high-end insurance policies, and the theory that lowering insurance premium prices will lead to concomitant rises in wages. This claim was seriously challenged at the time, and the debate revealed a key element of Gruber’s style. Gruber tried to cite rising wages in the late 1990s and correlate them with moderating premium price increases, when tight labor markets were surely a bigger reason. When challenged, he would add caveats to his claims; in fact, the Economic Policy Institute’s Larry Mishel confirmed that Gruber privately told him he exaggerated the case for wage growth. (By the way, how are wages doing these days, one year into Obamacare?)

This was my biggest problem with Gruber’s contributions to the debate. When talking with someone either inclined to agree with him or too ignorant to know the difference, Gruber made bold, sweeping statements. When talking to someone who actually knows a thing or two, he became more equivocal. He didn’t fully disclose facts in the same way he didn’t fully disclose his working relationship with the administration.

This tendency toward selective disclosure has antecedents in Obamacare itself. In the second year of open enrollment for the insurance exchanges, top officials have recently urged customers to shop around for new insurance deals, rather than auto-renew their old policies. Obamacare subsidies are tied to a benchmark of the second-lowest plan available in the marketplace. If that benchmark changes, even if a customer’s auto-renewed plan doesn’t raise prices, they will lose some of their subsidy benefit, causing cost spikes from 30-100 percent in some cases, according to a study from consulting firm Milliman.

Auto and home insurance generally doesn’t work this way, because of the lack of ties to federal benefits. For the consumer, this means digging through insurance options, figuring out if the new plan covers the same doctors as the old plan, having to weigh adapting to a new network over paying a higher price. This basically imposes a tax on people’s time. (And let’s hope that back-end difficulties don’t cause people to be put into two plans at once, or get lost in the system.)

Related: Low Premium Increases, High Deductibles for Obamacare 2015

Despite this belated media push, most people will simply auto-renew their policy: 68 percent, according to Gallup. They will only discover later the wide variance between their payments in year one and year two. And they will justifiably decry a bait-and-switch. Polls showing Obamacare users like the system might want to wait until this sticker shock comes along around January.

Conservatives will exhibit extreme hypocrisy in getting angry about this, by the way, as the system reflects their position that health care consumers should be “smart shoppers.” But they will throw President Obama’s words at him again, that if Americans liked their insurance plan, they could keep it. In this case, the president never said “if you like your plan, you can keep it, but it will cost you, and you really should shop for a new one every year.

Again, I followed the health care debate extremely closely. At no time was it disclosed that customers on the exchange would have to shop every year for a new plan to maintain their subsidy benefit.

Maybe that’s just a function of American politics, where politicians put their best sheen on the policies they promote while ignoring the downsides. But it will be seen as dealing in bad faith, especially when it results directly in a hit to people’s pocketbooks. During tax season, when exchange customers discover that they made more money than they initially estimated to acquire coverage and the IRS seeks to claw back some of their subsidies, the same outcry will ensue.

All of this is to say that the problems with Obamacare and the problems with Jonathan Gruber’s comments, as Ezra Klein hinted at, are one and the same. The law is enormously complicated, reflecting compromises endemic to American politics. But while the law had excessive media coverage, these time bombs that were never effectively communicated to the public do still exist. The administration, in four years of implementation, only selectively disclosed these facts.

Related: Here’s What Might Happen if SCOTUS Rules Against Obamacare 

The growing impression that politicians don’t play straight with their constituents is completely toxic, particularly to Democrats, who actually want to use government to improve people’s lives. It’s one thing to downplay unpalatable choices made in the law; it’s another to never disclose the consequences of legislation until it’s too late for anyone to react. Combine that with the moustache-twirling of a Jonathan Gruber, saying that the idiots should be happy for what they got, and you have basically every conservative stereotype about liberal elites confirmed.

The sad part is that this was all known four years ago. You could see that Gruber was the world’s worst spokesman, and that his style of selective disclosure would get him in trouble. And you could see that a Rube Goldberg health care reform, turning patients into shoppers and relying on them to negotiate the maze, could lead to serious problems for individual customers, even if you didn’t know exactly how. It must sound good to neoliberal technocrats to avoid charges of socialism by routing policies through the market. But voters care about results, and price spikes and clawbacks will highlight how markets create losers as well as winners. 

The whole thing demanded extreme amounts of transparency, which we never got. And the price paid, not just for Obamacare, but for Democrats in general, will be enormous. 

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