November 20, 2014

Obamacare Architect Confirms Obamacare Deceit

Recently, videos have surfaced showing that Obamacare was deliberately crafted in a way to obscure its costs and contents from the American public. In the videos, recorded in 2012 and 2013, economist Jonathan Gruber, a key Obama administration advisor and one of the law’s chief architects, demonstrated what the administration and congressional Democrats were actually thinking, as opposed to what they were saying publicly.

Gruber Was a Chief Architect of Obamacare

Gruber joined the Obama transition team in 2008 and shepherded the law from its theoretical early stages to enactment. According to a Washington Post profile on November 11, 2014, he was the central figure in convincing the president that reform should include an individual mandate to purchase insurance. In March and June of 2009, Gruber received two contracts from the Department of Health and Human Services – totaling nearly $400,000 – to assist the department “in evaluating options for national healthcare reform.” He worked with key Senators who were crafting the legislation, including Finance Committee Chairman Max Baucus. Gruber also earned well in excess of $1 million to advise states about Obamacare after it passed.

The Administration Sold Obamacare on False Premises


“This bill was written in a tortured way to make sure that CBO did not score the mandates as taxes. If CBO scored the mandate as taxes, the bill dies.”

 – Jonathan Gruber, October 17, 2013


Gruber’s comments show that the administration and congressional Democrats deliberately crafted Obamacare to mislead the American public. This is contrary to President Obama’s promise that “price transparency will be an important part of our efforts to reform health care.”

The administration double-counted the law’s Medicare cuts as both extending Medicare solvency and offsetting Obamacare spending, and it created the actuarially bankrupt CLASS program in order to increase revenues in the ten-year budget window. 


If “you made [it] 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 … that you could make it all transparent, but I’d rather have this law than not.”

 -- Jonathan Gruber, October 17, 2013


The administration deliberately hid the fact that Obamacare was essentially a massive wealth redistribution scheme. Obamacare’s essential benefits mandate and preventive services mandate, combined with the law’s price control scheme, dramatically increases the price of insurance for the relatively young and healthy. Premiums increased the most for young men and women: up an average of 75 percent and 40 percent, respectively, between 2013 and 2014.

In order to induce young and healthy adults to purchase overpriced coverage and cross-subsidize premiums for others, Obamacare included a tax penalty on people who failed to purchase government-approved coverage. If the administration had been honest with young adults about how the law drastically increased their premiums and taxes to finance the law’s mandates and regulations, it may not have passed Congress.


Many of the law’s taxes were crafted as a “clever exploitation of the lack of economic understanding of the American voter.”

 -- Jonathan Gruber, November 1, 2012


To his colleagues, Gruber acknowledged that taxes on insurance companies will ultimately pass to consumers in the form of higher premiums. Rather than telling the American people that Obamacare’s mandates and taxes would increase costs for most people, the president and his congressional allies persistently trumpeted the falsehood that the law would lower average family premiums by $2,500.


The “American voter is too stupid to understand the difference.”

 -- Jonathan Gruber, October 4, 2013


Rather than being open with the American people about the law’s costs and who would pay them, the self-proclaimed “most transparent administration in history” based its signature legislative accomplishment on a foundation of deception. Gruber’s remarks also show that the president’s law broke his repeated promise not to raise taxes on any family making less than $250,000 a year.

Subsidies Were Never Intended in the Federal Exchanges

These candid confessions by one of the central figures in the development of the health care law offer insight into what the administration and Democrats in Congress intended. Specifically, does the law allow Washington to provide subsidies for insurance plans bought in federal exchanges? The plain language of the law does not allow the subsidies in federal exchanges. According to the IRS’s interpretation, which is being challenged in the courts, Congress intended for subsidies to be available in exchanges run by the states or the federal government.


“Now, I guess I’m enough of a believer in democracy to think that when the voters in states see that by not setting up an exchange the politicians of a state are costing state residents hundreds and millions and billions of dollars, that they’ll eventually throw the guys out. But I don’t know that for sure. And that is really the ultimate threat, is, will people understand that, gee, if your governor doesn’t set up an exchange, you’re losing hundreds of millions of dollars of tax credits to be delivered to your citizens.”

 -- Jonathan Gruber, January 10, 2012



“[W]hat’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—but your citizens still pay the taxes that support this bill.”

 -- Jonathan Gruber, January 18, 2012


Gruber’s statements that the law limits exchange subsidies to state-established exchanges is consistent a Congressional Research Service analysis, which noted that “a strictly textual analysis of the plain meaning of the provision would likely lead to the conclusion that IRS’s authority to issue the premium tax credits is limited only to situations in which the taxpayer is enrolled in a state-established exchange. Therefore, an IRS interpretation that extended tax credits to those enrolled in federally facilitated exchanges would … likely be deemed invalid.”

Gruber’s statements are inconsistent with the administration’s argument today that the law allows the subsidies in both state and federal exchanges. It appears that the administration decided to rewrite the law through the IRS when it became clear that many states disapproved of the law’s increased spending and mandates, and they would not establish their own exchange. A joint report by two congressional committees found that the IRS and Treasury Department expressed concern that the statute did not authorize subsidies in federal exchanges and that “there was no statutory provision that would deem a federal exchange to be an ‘Exchange established by the State.’”

The IRS rule authorizing subsidies in federal exchanges effectively papers over the cost of the law’s many expensive mandates and regulations by passing the costs on to taxpayers. Since the subsidies are linked to the employer mandate tax penalties and the individual mandate tax penalties, IRS’s rule extends those penalties to people and employers in states that opted not to create their own exchange. As a result, the IRS rule raises taxes and spending by hundreds of billions of dollars beyond what Congress allowed.

Gruber’s candid remarks show that the clear text of the law was not an accident and that the IRS rule is, in fact, illegal.

Issue Tag: Health Care