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Did conservatives really find proof that Congress intended to withhold some subsidies? (Spoiler: nope)

jonathan gruber

In our last post, explaining the most recent Obamacare court battles, we pointed out that there was no evidence that Congress intended to withhold subsidies on the federal exchanges. Well, on Friday conservatives said they’d found proof– a January 2012 speech from Jonathan Gruber, an MIT health economics professor and former adviser to the White House, where he gave this response to a question from an audience member:

I think what’s important to remember politically about this, is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits. 

And later in the afternoon, video surfaced from the Q&A of another speaking engagement where he said basically the same thing.

These two comments have received a ton of attention– not because they prove anything about Congress’s intent regarding the subsidies (after all Gruber was just one of many, many advisers helping with the law). Instead they’re subject of intense focus because they’re literally the only evidence that opponents have to make their case. Yet these statements are contradicted by the facts at the time, Gruber’s own work on the bill, and the hundreds of other people involved in writing and reporting on Obamacare over the last few years.  

Here’s why you shouldn’t put much weight on Gruber’s comments.

1. His comments were already wrong when he made them

Both of these comments were made off-the cuff at speaking engagements in January 2012. However, the IRS had already released a preliminary ruling six months earlier on the subsidy question. Mother Jones’ Kevin Drum writes:

Gruber surely knew this, and therefore knew that (a) the final ruling hadn’t been issued yet, but (b) the IRS had already signaled that it intended to rule that subsidies were allowed on federal exchanges. Maybe he misremembered the IRS’s preliminary ruling, or maybe he was just mixing this up with something else. Who knows?

The best explanation we’ve seen for this puzzling statement has come from Gruber himself, speaking to The New Republic’s Jonathan Cohn:

I honestly don’t remember why I said that […] At this time, there was also substantial uncertainty about whether the federal [exchange] would be ready on time for 2014. I might have been thinking that if the federal [exchange] wasn’t ready by 2014, and states hadn’t set up their own exchange, there was a risk that citizens couldn’t get the tax credits right away.

But there was never any intention to literally withhold money, to withhold tax credits, from the states that didn’t take that step. That’s clear in the intent of the law and if you talk to anybody who worked on the law. My subsequent statement was just a speak-o—you know, like a typo.

2. His comments contradict work he did on the law

Of course, opponents claim that Gruber’s comments weren’t “speak-o’s” at all– instead they show what Gruber really thought was Congress’s intent. However, that take is contradicted by the actual work Gruber did on the bill.

His job was to use micro-simulations to model how many people would get insurance under the various scenarios Congress was considering, and as he tells Cohn:

I didn’t assume every state would set up its own exchanges but I assumed that subsidies would be available in every state. It was never contemplated by anybody who modeled or worked on this law that availability of subsidies would be conditional of who ran the exchanges.

Gruber’s take is supported by the bill’s Congressional Budget Office scores, which also assumed that subsidies would be available in all 50 states, and by all accounts matched up closely with Gruber’s predictions.

UPDATE: From Washington and Lee health law professor Timothy Jost, writing in Health Affairs:

Of course, Professor Gruber neither drafted nor voted on the ACA, so his understanding in 2012 says nothing about what Congress intended in 2010. I would note, however, that Professor Gruber and I worked together on a study panel for the National Academy of Social Insurance on exchanges, and our publication on federally facilitated exchangesissued in December of 2011 clearly states that federal exchanges can issue premium tax credits. Whatever Professor Gruber might have been thinking when he apparently made statements to the contrary in early 2012, he knew better.

Also, The Washington Post’s Greg Sargent points to studies Gruber did in 2011 and 2012 estimating the impact of subsidies in Wisconsin, which seem to assume subsidies would be available on the federal exchange.

3. His comments contradict pretty much everyone else who worked on the law

There were many reporters covering the debate leading up to the passage of Obamacare, and they interviewed nearly everyone who helped draft the bill. These journalists all say that nobody told them that subsidies would be unavailable on federal exchanges.

Here’s Vox’s Sarah Kliff (who at the time worked for Politico and later The Washington Post):

After covering the debate over health reform since it began in 2009, I feel completely comfortable saying Congress meant for residents of all 50 states to have access to financial help. It was never a question, during the five years I’ve spent writing about Obamacare, whether this would be case.

And The New Republic’s Jonathan Cohn:

I had literally hundreds of conversations with the people writing health care legislation in 2009 and 2010, including quite a few with Gruber. Like other journalists who were following the process closely, I never heard any of them suggest subsidies would not be available in states where officials decided not to operate their own marketplaces—a big deal that, surely, would have come up in conversation.

In fact, back in 2010, Cohn received an email from a House staffer that seems to confirm that her boss, who worked directly on the law, assumed that subsidies would be available on both federal and state exchanges.

There’s also NPR’s Julie Rovner:

FTR, like Jonathan Cohn, I also had 100s of conversations with people writing the bill in 2009 and 2010, and I never had anyone mention the idea that subsidies would only be available in state exchanges.

And Aaron Carroll at The Incidental Economist:

Is there a single CBO analysis which documents what would happen if states refused to set up exchanges and would therefore “lose” their subsidies? Were any of Gruber’s models set up in this manner? If not, then I don’t understand how anyone in Congress or who set up the law thought it was going to work that way. […]

This blog has been going since before reform was passed. Find me a single post where we discussed this. Find a post where we discussed others discussing this. Do you think we would have ignored this? We wouldn’t have been concerned?

Heck, even lobbyists working to influence the final bill said they didn’t hear squat about Congress wanting to withhold subsidies:

Remember that the lawsuit claims Congress was attempting to coerce states into building their own exchanges by withholding the subsidies, so the fact that none of these people heard squat about it is important. As University of Michigan law professor Nicholas Bagley has pointed out, “For threats to work, they have to be communicated.”

What’s really going on

Regardless of what Jonathan Gruber actually believes, his comments shouldn’t mean much legally. Rick Hasen, a law professor at the University of California-Irvine, tells MSNBC:

“As a legal matter, it should really not carry much weight at all. To begin with, the main crux of the D.C. Circuit opinion is based in a strict textualist reading of the statute, that is looking only at the word of the statute and not to any outside sources. Even among those who look to legislative history, a statement of a non-legislator made outside of a hearing should be entitled to very little weight.”

But politically Gruber’s comments are important. Conservatives hope that they could help swing public opinion about Congress’s intent, and that could affect the outcome of the case.

The entire case boils down to Congress’s intent: did it intend to withhold subsidies or not? The D.C. Circuit Court looked only at the text of the law, and really just at a very narrow section of it. Their ruling said that if Congress meant for both state and federal exchanges to get subsidies, the text would have simply said “exchange” without the “established by the State” part. (However, as we mentioned in out last post, this ignores the fact that in other parts of the law Congress refers to “exchange established by the State” when it clearly means both exchanges.)

However, most of the time simply pointing to an out-of-context snippet of text as proof of Congressional intent isn’t good enough. Most courts– and especially the Supreme Court– are concerned with maintaining their legitimacy and are worried about charges of “judicial activism.” They know that overruling a key section of the biggest health reform law since Medicare based on a technicality is basically the judicial equivalent of George Costanza winning Trivial Pursuit because a card says the “Moops” invaded Spain:

It’s also not good enough to say that Congress’s intent was unclear, since, as Bagley explains, when a law is ambiguous “it’s up to the agencies charged with interpreting the ACA to resolve that ambiguity. The tie goes to the government.”

And so, because of that long-standing precedent, opponents need evidence from the legislative history showing that Congress meant to withhold subsidies– something nobody involved with writing or covering the law actually believes. But conservatives are hoping if they convince enough of the public otherwise, it will give conservative justices cover to strike down the subsidies (and thus deliver a big blow to Obamacare) while at least appearing to maintain the Court’s legitimacy. These off-the-cuff comments, made by one adviser, two years after the passage of the law are all they have to work with. And so, as Vox’s Ezra Klein sums up:

Gruber’s comments aren’t getting so much attention because anyone actually believes them. They’re getting so much attention because some people want other people to believe them.

{ 2 comments… add one }
  • Rich Weinstein July 29, 2014, 8:10 pm

    http://m.youtube.com/watch?v=fA243Q4vSIQ

    Your comment #2 is contradicted by Dr. Gruber at 6:50 of the above video.

  • Rob Cullen July 29, 2014, 8:59 pm

    @ Rich: Don’t think the video really contradicts anything in that section. If he had been asked how many states he expected would be operating their own exchanges in 2014, then you’d have a point. But in the context of the answer he was giving, which was about Medicare vouchers, I think “50 different exchanges” is shorthand for “a lot of exchanges.” Because really, if you want to take him literally, if every state created its own exchange there would actually be 51 in total (every state and DC)– so you could say the video “proves” that he expected at least two states to join a federal exchange. But again, in the context of the question, I think he just making the point that there would be a lot of different exchanges.

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