The Real Lessons of “Gruber-gate”

After Solyndra-gate, Benghazi-gate, and I.R.S.-gate comes Gruber-gate—the latest flap over the 2010 Affordable Care Act. The controversy centers on Jon Gruber, an M.I.T. economist and health-care expert who, during the passage of the A.C.A., served as a highly remunerated consultant to the Obama Administration. In a series of talks at academic conferences, videos of which have recently surfaced, Gruber says that the creators of the A.C.A. deliberately misrepresented, or kept vague, some of its contents, seeking to exploit the “stupidity” of ordinary voters.

If you want to catch up on the details of what Gruber said and how his statements came to light, Sarah Kliff, of Vox, has posted a good explainer. But it’s important to note that this story didn’t get going in a vacuum. Conservatives and Republicans seized on the Gruber videos in the wake of the midterms, at a moment when the health-care exchanges at the heart of the A.C.A. were preparing to take applications for 2015. On Saturday, the first day for enrollment in new policies, more than a hundred thousand people logged on to Healthcare.gov and more than twenty thousand people submitted applications for coverage, according to Sylvia Mathews Burwell, the Secretary of Health and Human Services.


This level of interest came as no surprise. Despite the disastrous launch of Healthcare.gov, this time last year, surveys show that the exchanges are now operating largely as advertised. In the past twelve months or so, about 7.3 million Americans have used them to take out insurance plans. An estimated 8.7 million people have obtained coverage through Medicaid, which saw its income-eligibility thresholds raised under the A.C.A. With so many people getting coverage, a lot of them for the first time, the number of uninsured Americans has fallen sharply. And, moreover, most people who have purchased insurance policies on the new exchanges are happy with them.

You don’t believe me? A recent article in the Times cites surveys carried out by the Rand Corporation, the Commonwealth Fund, and Gallup, all of which indicated that the percentage of working-age Americans without health coverage has fallen by about a quarter, from somewhere around twenty per cent to somewhere around fifteen per cent. And, on Friday, Gallup published the results of a new survey, which asked people who bought policies through government exchanges what they thought of them. Seventy-one per cent of respondents rated the quality of their coverage as good or excellent. Nineteen per cent said it was fair. Nine per cent said it was poor.

If your goal were to demolish large parts of Obamacare, or even to repeal it entirely, would you want voters to dwell on figures such as these? Or would you prefer that they focus on the videos of Gruber? Conservative commentators and activists, having already promoted “Grubering” as a new verb (meaning: trying to deceive people), are now pinning a new nickname to the professor: the Six-Million-Dollar Man. According to Deroy Murdock, a contributor at National Review online, that’s about how much money various government entities have paid Gruber in consulting fees during the past few years for his advice and for the use of his computer models. John McCain, in remarks to the Washington Post, summarized, with commendable honesty, what purpose the Gruber saga is playing: “This gives us ammunition to make fundamental changes to the law.”

Unlike some other commentators, I don’t really blame mainstream media outlets, such as the Post, for running with the Gruber story. News is news, after all—even when, as in this case, it’s not very new at all. But a legitimate news story for political reporters to pursue isn’t the same thing as a genuine scandal, which, for example, is what the Bush Administration’s deliberate mis-marketing of the Iraq-war resolution amounted to. If ever there were a classic case of Grubering, that is it. Republican efforts to tar the Obama Administration haven’t come close to meeting such a standard, and Grubergate, although it’s providing conservatives with endless amusement and causing the Administration a good deal of embarrassment, is ultimately another dud.

That’s not to say Gruber wasn’t an influential adviser to the Administration—he was. As a primary force behind the Massachusetts health-care reform on which the A.C.A. was based, and as the owner of a computer model that provided numeric answers about various detailed policy proposals much more quickly than the Congressional Budget Office could, he was an indispensable expert: that’s why the Department of Health and Human Services and various other agencies hired him and paid him handsomely. Rather than belittling Gruber, which isn’t very credible, the Obamaites should openly acknowledge this and explain what role he played.

Still, the mere fact that Gruber was a significant player doesn’t mean that the videos of him appearing at academic conferences, most of which are several years old, have revealed anything particularly scandalous. The most incendiary thing he said was that the A.C.A.’s authors designed the reform so that residents of states which didn’t launch their own exchanges wouldn’t be eligible for federal subsidies. This seems to mirror what opponents of the A.C.A. have claimed in a series of lawsuits, one of which the Supreme Court is now considering. (My colleague James Surowiecki wrote about this case, King v. Burwell.) But Gruber has already disavowed what he said, acknowledging that it was mistaken, and many people who were involved in the actual writing of the law—Gruber wasn’t—deny there was anything to it to begin with.

Some of Gruber’s comments on the videos are more credible. It seems perfectly believable that the Administration went to considerable lengths to prevent the Congressional Budget Office from classifying the individual mandate as a tax, a designation that could have torpedoed the entire reform. It was also fair to suggest that, on occasion, some supporters of Obamacare overstated its commitment to cost containment.

All Administrations, when they are trying to pass big reforms, stress the positive things that are likely to ensue (for example: the number of uninsured people will go down) rather than emphasize the possible downsides of the program (some people who already have insurance may face higher premiums). Did the Reagan Administration, in introducing its huge tax cuts, acknowledge how they would balloon the deficit? Did the Clinton Administration, in approving the final dismantling of the Glass–Steagall Act and introducing other forms of financial deregulation, advertise the risks that such policies entailed? Did the Bush Administration, in making the case for invading Iraq, dwell on what might happen when Saddam wasn’t there to hold Iraq together?

None of them did, of course. But the seriousness of the deception depends on the extent of the harm done. Reagan’s tax policies did considerable injury to the U.S. economy and, most certainly, so did the Clinton-era deregulation. In the case of the Iraq war, the harm done was even greater. Indeed, it was immeasurable.

And in the case of Obamacare?

About the worst that can be said about the A.C.A. is that it has proved more of a hassle to people who had previously taken out individual coverage than its authors said it would. In many cases, following the enactment of the law individual policyholders saw their policies cancelled, and they were forced to take out new ones, some of which cost them more than the old ones. This was often because the new policies were better and offered more coverage. But the President said that this wouldn’t happen, and it did. (Of course, critics of Obamacare make a bunch of other charges, too. For instance, they claim that the A.C.A. has hampered hiring and undermined small businesses. So far, though, there isn’t much evidence, if any, to support these claims.)

On the plus side, the law has undoubtedly done what it was designed to do: make health insurance more affordable for low- to middle-income people and help fill a gaping hole in the social-safety net. According to the latest figures, roughly four out of every five people who purchased insurance on the government exchanges were eligible for a federal subsidy, and, on average, these subsidies reduced the cost of coverage by seventy per cent. No wonder most of the folks who used the exchanges like them. Moreover, in designing the law, the Administration did include some economy measures, such as reducing the overpayments to doctors and hospitals that had been taking place under Medicare, which will help to bring down costs over the long-term—and may also have contributed to the recent slowdown in health-care inflation, although this is a matter of debate.

Looking back, health-care historians may well argue that it would have been simpler and more cost effective to have foregone the exchanges completely and adopted a more statist alternative, such as raising the Medicaid income thresholds to twice the poverty level (or even further) and rebranding the program to remove the stigma attached to it. But Obama’s top advisers and senior Democrats on Capitol Hill concluded that a “public option” of this sort didn’t have the support of enough powerful interests to make it through Congress, and they were in a position to know. So the Administration went down the Massachusetts–Gruber route, making a deal with the big health insurers who stood to gain (and, indeed, have gained) from a big jump in enrollments fuelled by generous federal subsidies.

In political terms, this approach turned out to be something of a Faustian bargain. Although the insurance policies sold through the government exchanges are popular with those who take them out, the over-all reform package still has low approval ratings: just thirty-seven per cent, according to Gallup. But there’s nothing shameful or scandalous about the policy, or about how it was introduced. To the contrary. After decades of ignoring a glaring market failure—the failure of the richest economy in the world to provide health-care coverage to many of its less-well-off citizens—the federal government finally stepped in and introduced a remedy. Because of the way Washington works, it wasn’t a straightforward, elegant, or inexpensive remedy. But it needed to be put in place, and it’s working out much as its knowledgeable proponents, Gruber included, said it would. That’s the real story, which the Republicans in Congress and their addled supporters are busy trying to obfuscate.