New Video Shows Gruber Discussing How Health Taxes Were Structured To Exploit The Lack of Knowledge Of The American Voter

Screen Shot 2014-11-13 at 8.45.49 AMThis week we discussed another videotape of Jonathan Gruber, a Massachusetts Institute of Technology economist who played a major role the ACA, or “Obamacare,” making revealing and highly embarrassing statements about the strategy behind the passage of the Act. Gruber had already previously attracted controversy with statements where he endorsed the theory at the heart of the recent decisions in Halbig and King by challengers to the ACA: to wit, that the federal funding provision was a quid pro quo device to reward states with their own exchanges and to punish those that force the creation of federal exchanges. That issue will now be decided by the United States Supreme Court. Gruber caused uproar when, after he had denounced the theory as “nutty” during the arguments in Halbig and King, he was shown later to have embraced that same interpretation. Gruber has become a major liability in the litigation. Gruber then was back in the news with an equally startling admission that the Obama Administration (and Gruber) succeeded in passing the ACA only by engineering a “lack of transparency” on the details and relying on “the stupidity of the American voter.” Now a new videotape has surfaced from Gruber speaking at the University of Rhode Island in 2012 and expressing the same contempt for the intelligence of citizens — suggesting again that they were hoodwinked to “the lack of economic understanding of the American voter.” Gruber was paid roughly $400,000 to help design the ACA by the Obama Administration, but he is proving far far more costly in its aftermath.

The latest comments came with discussion of the so-called “Cadillac tax” which mandated that insurance companies would be taxed under the Act. It was the idea of then Senator John Kerry, who Gruber describes as his “hero” in using the naiveté of voters against them. He explains that taxing individuals would have been “politically impossible” so Kerry and the Administration opted to tax the companies with full knowledge that the cost could be passed on to citizens:

“So basically it’s the same thing. We just tax the insurance companies, they pass on higher prices that offsets the tax break we get, it ends up being the same thing. It’s a very clever, you know, basic exploitation of the lack of economic understanding of the American voter.”

In another view taken from at an October 2013 event at Washington University in St. Louis, Gruber also refers to the “Cadillac tax,” and says “They proposed it and that passed, because the American people are too stupid to understand the difference.”

In fairness to Gruber, (putting aside his obvious low opinion of the American people) his frank discussions are consistent with speaking as an academic. However, such machinations are rarely confirmed by high-level consultants or officials. The ACA was pushed through by a muscle vote on a handful of votes while the Administration made claims that he later had to admit were misleading at best, such as the President’s repeated assurance that citizens could keep your current insurance policy if you liked it. There was a great deal of cynicism and misleading representations made during the ACA debates — reflecting a deep-seated contempt for the intelligence of the American voter. Gruber however seems to celebrate the success in using what he viewed as the stupidity of citizens, to quote his earlier comments, to secure passage of the ACA. It is the triumph of the ends over the means — the mantra of Beltway denizens who view more principled actors as naive chumps. What is shocking for many outside of the Beltway is of course the moral relativism and cynicism reflected in such comments, but Gruber is the norm in Washington. He is the face of the consequentiality morality that has long governed this city.

What is different is that he admits it.

The video below shows an honest and frankly insightful account of how the tax issues are addressed as well as the merits of such tax systems. It is the type of lecture that occurs on many campuses but the lecturer is rarely the architect of the underlying legislation. It is the combination with the earlier videotapes that has fueled the ongoing controversy, even though this is less confrontational. Actually, the far more significant statements were found in the first videotape where Gruber expressly endorses the theory of challengers in King and Halbig. Those statements are likely to be cited in the ongoing litigation and Gruber later effort to dismiss them as unintentional or off-the-cuff seemed less than honest.

The fact is that academics are often caught in a dilemma in moving between the political and academic worlds — worlds based on different values. Where the political world values opaqueness and evasion; the academic world values transparency and clarity. Gruber is a brilliant and highly distinguished academic and his lectures satisfy his obligation to be honest and accurate. That is precisely why his former associates in the Obama Administration may now find him less than ideal as a political ally.

148 thoughts on “New Video Shows Gruber Discussing How Health Taxes Were Structured To Exploit The Lack of Knowledge Of The American Voter”

  1. Bill H, because they will hate Ocare, and those with none or poor insurance will demand it. You can’t compare smaller countries with us. We are just too big. In business, problems are solved by breaking them down to parts. People concentrate on the parts and find the problem. That’s logic. Logic is not in the Fed lexicon!

  2. [Music] [to the tune of the Armour Hot Dog Song]
    Goober! Call me Goober!
    What kind of people call me Gruber?
    Fat kids, skinny kids, kids who climb on rocks.
    Old dogs, skinny cats, even pigs with chicken pox…
    Call me Gruber…
    When my name’s Goober.
    The dog, kids, like! To bite!

  3. I saw a quick piece on the news of a lady’s drug that went from $90 couple for 3 months to $1,212. I think that warrants investigation to see if there was some sort of industry agreement. If not, hopefully a drug maker sees the option for advantage by getting the drug out at a more reasonable cost, forcing the other to comply. I think healthcare in general needs this free market competition. If you could open your own MRI and factor out your costs so that it would be a $200 procedure instead of a $2,500 procedure, things would change in a hurry. Except, of course, the AMA sets the standards for these things. That is where the problem comes in.
    The drug problem is scary though because people are hurt “in transition” during these free market corrections. I don’t know what the answer is. I know if I was the lady who depended on meds that went up that much, I would be frightened. It is a marketing opportunity for a company to produce the drug at a fair cost though, and give them the ability to call the other company “crooks.” Still don’t think you should have any gov plan until we get the healthcare playing field worked out.

  4. happypappies,
    The middle man… that is the key component to the Health care system currently run in America. If it was a direct pay policy of “actual” costs without the middleman(s) all contributing their markups… More like Universal Health Care might look like.

    I’ve always known that it’s a “pimped out” RomneyCare.

    1. Well, yes, but we are footing the bill through the insurance companies and now double though the generic and regular drugs. I voted for Obama in 2008, and Gary Johnson in 2012. So, I understand your feelings.

  5. Justice Department Probes Generic Companies After Price Hike Reports

    A probe into the recent price hikes for some generic drugs appears to be widening. Last week, the U.S. Department of Justice issued subpoenas to two generic drug makers seeking information about their interactions with competitors.

    Lannett, a generic drug maker, says a senior sales and marketing executive was served with a grand jury subpoena “relating to a federal investigation of the generic pharmaceutical industry into possible violations” of anti-trust laws.

    The feds want documents about communication or correspondence with rivals about generic drug sales, but not any particular product or period of time, according to a filing with the U.S. Securities and Exchange Commission (see page 16).

  6. Congressional Panel to Probe Generic Drug Price Hikes
    Tuesday, November 11, 2014

    WASHINGTON, Nov. 11 – Sen. Bernie Sanders (I-Vt.) announced today that a Senate panel he chairs will hold a hearing next week to explore why the costs of certain generic drugs are skyrocketing. Rep. Elijah Cummings (D-Md.), who has worked with Sanders on this issue, will take part in the Nov. 20 hearing of the Senate Subcommittee on Primary Health and Aging.

    Price hikes for generic drugs also reportedly have come under scrutiny by the U.S. Department of Justice. Subpoenas recently were issued to two generic drug makers seeking information about their interactions with competitors, The Wall Street Journal disclosed on Monday.

    “We’ve got to get to the bottom of these enormous price increases,” Sanders said. “It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs. Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescriptions to manage their health needs and now some of them are becoming unaffordable.”

    “We launched this investigation because prices for generic drugs are skyrocketing, preventing many Americans from purchasing the critical medications they need,” Cummings said. “I applaud the Department of Justice for also looking into the root causes of these huge increases, so that every American has access to the medications they need.”

    Sanders, chairman of a Senate health care subcommittee, and Cummings, ranking member of the House Oversight Committee, recently sent letters to executives of 14 pharmaceutical companies as part of their investigation. They cited examples of dramatic price increases for generic drugs like Digoxin, a medication used to treat congestive heart failure. It went from 11-cents a pill in October of 2012 to $1.10 a pill this past June. The price for a bottle of antibiotic pills, Doxycycline Hyclate, shot up to $1,849 from only $20 last fall, they added. “These huge price increases are affecting the pocketbooks and health of millions of Americans,” they wrote.

    Sanders and Cummings also have called on the Obama administration to address “staggering increases” in generic drug prices. “The federal government must act immediately and aggressively to address the increasing costs of these drugs,” they wrote in an Oct. 16 letter to Sylvia Burwell, the Department of Health and Human Services secretary.

    1. Hey – I know that’s true because my friend Bonnie’s Docepine went up 20 dollars. It’s an old stand by drug. I’m not using mine and I’m gonna give her mine screw them. This issue with the Pharmaceuticals has been going on forevermore. When I was young I used to try to figure out the trigger. Ws it the Doctor, the Health insurance or Big Drug or the Government behind it all. I know I know Iknow – Its a shell game. And I think that Gruber guy is having a melt down. I found an old video of him in 2012 and he is like having a personality change.

    2. Max-1 – they drove the competition out of the market so prices went up. It should be a short hearing.

  7. HAHAHAHAHA this is the most entertaining thing I ever read besides that Moonbattery thing right after Obama got elected in 2008, MMmmmmdated 11/2008 – This is ominous — given Democrats’ open intention to nationalize healthcare as quickly as they can. Under the headline “Obama to Broaden Genetics Role in Medical Care”:

    “The president-elect has indicated his support for both advancing personalized medicine and increasing (research) funding,” said Democratic Rep. Patrick J. Kennedy…. Uh oh this might be kinda mean sorry

    Obama is also interested in the role that personalized medicine could play as an element of changes in the broader health care system.

    “Personalized” medicine focuses on statistical tendencies based on genetic makeup. The implications go beyond medicine to politics.

    Healthcare bureaucrat Mark McClellan approvingly remarks:

    If we’re thinking about reforming the health care system, we should be thinking about what medicine will be like down the road when health care reform is fully implemented.

    We sure should. What will healthcare be like when the government is faced with inevitable supply problems after setting the price of a precious and limited commodity to free? Obviously it will be rationed, like it is in England and Canada. “Personalized” medicine that focuses on patients’ genetic makeup will come in handy when deciding who gets healthcare and who doesn’t.

    For some real healthcare savings, personalized medicine will be combined with Obama’s astonishingly fanatical support for abortion. Being diagnosed Down syndrome is already a prenatal death sentence in most cases. Before long the same may be true of a genetic predisposition to high blood pressure.

    At least this could mean fewer women being punished with a baby.

    On a tip from Cool Zero.

  8. I is sure glad Mr. Groober got that helthcare bill passed on my dumbniss. I need somebuddy like Groober to take care of me cause he know what best for me more then me do. He know how dumb we is so he just dont want us dumbies to keep politishins from helping us like we need cause we dont know.

  9. Outrage… Amnesia…
    What am I supposed to be mad at, exactly?

    To anyone paying attention, this is not new news but old rage resurfacing again and at a time of political change… Politics.

    Gee… Will we get to see the drama of reams of blank paper strewn around DC in political follies of obstructing progress toward making the state of being human, affordably treatable.

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