Yesterday, we discussed a controversy involving Jonathan Gruber, a Massachusetts Institute of Technology economist who played a major role the ACA, or “Obamacare.” He told MSNBC recently that “It is unambiguous this is a typo. Literally every single person involved in the crafting of this law has said that it`s a typo, that they had no intention of excluding the federal states.” However, a libertarian group uncovered a video showing Gruber saying quite clearly after the passage of the law that this provision was a quid pro quo device: state exchanges for tax credits. Conservative sites have lit up over the video below showing Gruber essentially describing the very tradeoff identified in Halbig. He told MSNBC recently that “It is unambiguous this is a typo. Literally every single person involved in the crafting of this law has said that it`s a typo, that they had no intention of excluding the federal states.” However, a libertarian group just uncovered a video showing Gruber saying quite clearly after the passage of the law that this provision was a quid pro quo device: state exchanges for tax credits. Conservative sites have lit up over the video below showing Gruber essentially describing the very tradeoff identified in Halbig. Indeed, Gruber later signed on amicus briefs supporting the White House interpretation and even joined the counter spin from the White House and denouncing that very interpretation as “nutty.” Gruber responded to critics showing the video below by that “I was speaking off-the-cuff. It was just a mistake.” However, now another response has been raised in which Gruber gave the same interpretation during this presentation. In my view, the point is again to ask why both sides have to denounce each other as nuts or extremists when there are good-faith arguments can be made on both sides.
As I explained in my testimony, at issue is the express language of the statute that ties the creation of state (as opposed to federal) exchanges to the availability of tax credits. Congress established the authority of states to create their own exchanges under Section 1311. If states failed to do so, federal exchanges could be established under Section 1321 of the Act. However, in Section 1401, Congress established Section 36B of the Internal Revenue Code to authorize tax credits to help qualifying individuals purchase health insurance. However, Section 1401 expressly links tax credits to qualifying insurance plans purchased “through an Exchange
established by the State under 1311.” The language that the qualifying exchange is “established by the State” seems quite clear, but the Administration faced a serious threat to the viability of the Act when 34 states opted not to create exchanges. The Administration responded with an interpretation that mandates: any exchange – state or federal – would now be a basis for tax credits. In adopting the statutory construction, the Administration committed potentially billions in tax credits that were not approved by Congress. The size of this financial commitment without congressional approval also strikes at the essence of congressional control over appropriation and budgetary matters.
Around the 31 minutes mark on the video below, Gruber addressed the issue:
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—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this.
Gruber later insisted that his support for the interpretation was the result of an off-the-cuff comment and a mistake. However, now a second answer is being highlighted where Gruber gives the very same interpretation embraced in Halbig.
Q: You mentioned the health implementation exchanges in the states, and it’s my understanding that if states don’t provide them, then the federal government will provide them. What do you say to that?
GRUBER: Yeah, so these health-insurance Exchanges, you can go on ma.healthconnector.org and see ours in Massachusetts, will be these new shopping places and they’ll be the place that people go to get their subsidies for health insurance. In the law, it says if the states don’t provide them, the federal backstop will. The federal government has been sort of slow in putting out its backstop, I think partly because they want to sort of squeeze the states to do it. 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. But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it. But you know, once again, the politics can get ugly around this.
The point is not to hammered Gruber on this but to address his later criticism of the court and commentators who have embraced this interpretation as simply “nutty.” I happen to agree with the interpretation of the D.C. Circuit as a matter of legisprudence. I believe that the statute is clear and that it is dangerous for a court to read out such express language as “a typo” — just as I believe that it is dangerous for a president to read out such language.
As I noted before, it will be interesting to see if both the Fourth Circuit and D.C. Circuit opinions go to en banc review. You could have the D.C. Circuit flip the result in favor of the Administration and the Fourth Circuit flip in favor of the challengers — preserving the split in the circuits. Even without such a split, however, there is a strong argument for Supreme Court review. It will be equally interesting to see if briefs bring in Gruber’s statement since he has signed amicus briefs in favor of the Administration’s interpretation. After all, Gruber received almost half a million dollars from the Obama Administration to consult on the ACA and clearly maintaining (at one time) that the provision meant what it says: that states with federal exchanges would not fall under the tax credit benefit.
When confronted on the second discussion, Gruber simply said “same answer.”
These are the same people who defended the sociopath liar, Bubba.
ringhals has both hands full of straw, grasping desperately. Sad to see.
@ringhals
Ambiguity, or lack thereof, is the “real” LEGAL issue. But I maintain spin is the “real” POLITICAL issue. That is why you see the word “nutty” in the title above. It can’t be nutty Republican interpretation if one of Obamacare’s consultants said the same thing twice. IMHO.
Squeeky Fromm
Girl Reporter
@Squeeky Fromm: Ambiguity is the real issue here, about how the law can be reasonably interpreted and enacted. And that is up to the courts to decide. Cheers!
Thanks Squeeky,
I’m ‘assuming’ the same thing. Which then begs the question of the need for 50 exchanges; their had to be an incentive to opt in and go through the effort to create the State exchanges.
Just like the Geico ad says, “words really do hurt”. In this case, he’s done it twice.
@ringhals
There is plenty of ambiguity to go around. What the “real” issue is , was it just mean old Republican courts which read the law that way, for political reasons, or was the law reasonably interpreted that way. Gruber’s comments destroyed that line of spin. So did the King Court, but Gruber is easier to plop into a sound byte ad.
Squeeky Fromm
Girl Reporter
@johno
That is over my head. I presume the answer is “yes” or they couldn’t do it. I ASSUME each federal state exchange has to comply with state law and simply draws from the pool of authorized insurers. Much the same way that car insurance for drivers with DWIs goes thru an exchange. Insurers won ‘t put into the particular pool unless they can charge enough premium to cover the risks plus a profit.
Squeeky Fromm
Girl Reporter
@John O: “Trying to remember old lies is difficult, the truth, not so much.”
So, you think he was struggling to remember because he was lying in 2012?
ringhals,
“How might any of us have answered in that situation?”
Trying to remember old lies is difficult, the truth, not so much.
Squeeky,
Wouldn’t 1321 comply with the McFarren-Ferguson Act when setting up the Federal exchange for each State.
Squeaky, the squeeze might be state governments contemplating the unavailability of insurance AND the subsidies if the federal exchanges weren’t up and running by the time participating states had them in place. He was speculating.
Also, being asked about an out of context quote from an old Q&A session that he didn’t much remember, yeah, it’s no wonder he responded the way he did. How might any of us have answered in that situation?
I’ll join you and Annie with a delicious, frosty beer.
First things first Annie.
WRT the ACA, what reasonable explanation is there for Federal funds to go to States to set up exchanges when the Feds would simply (well not so simply) set it up for them? If the enrollees were indeed eligible for tax credits in either State or Federal exchanges then it sure seems like a huge waste of taxpayer money.
OR, is it more reasonable to conclude there is no ambiguity in the statute and that the difference between State and Federal exchanges is the eligibility for tax credits as stated in 1311 and 1401.
@johnoliver
Because each state regulates the insurance sold within the state There is a law, the McFarren -Ferguson Act (sp???) which keeps the feds out of it. Bob’s Insurance Co. might be legal to sell in Texas, but not Louisiana.
Squeeky Fromm
Girl Reporter
Yes, let’s just have one big Federal exchange, then take the next step to Single Payer. Good idea John.
The question is still out there waiting for an answer.
Why do we need 50 State exchanges when one Federal exchange would provide the same service and benefit?
Squeeky, I think all the hoopla over Gruber’s comment was premature and sort of overreaching. I guess we’ll see what happens. I do like a Mimosa now and again Squeekers. Have you tried Moscato? Mmmm, delicioso.
@ringhals
I disagree with their assessment that it was out of context. Gruber mentioned 2 reasons for the exchange. One was just the place to shop for it. I do not see what kind of a “squeeze” he could have been talking about unless it was the witholding of subsidies. Plus, Gruber himself says he was mistaken in his earlier comments IIRC. Sooo, it can ‘t be both ways, because if it was taken out of context AND he was mistaken, then Gruber must now believe that the subsidies were meant for state exchanges only.
Sooo, Annie, put down the champagne and the party hats unless you have something else to celebrate. On second thought, keep the champagne and I will get me a glass of Franzia White Zinfadel wine and have a drink, too. It can’t hurt anything.
Squeeky Fromm
Girl Reporter
Those who jumped on the comment by Gruber, which as it appears now, was taken out of context are beginning to look quite petty…again.
Thanks for hose links ringhals.
Hi, Squeaky! No they are saying that a careful parsing of Gruber’s statement does not support that he intended the subsidies provision to be “…quid pro quo …state exchanges for tax credits.”
However, you make an excellent point about how opponents of the law need to be careful what they wish for!