Jonathan Gruber and the Truth About Obamacare

Published November 25, 2014

Consumer Power Report #446

Jonathan Gruber has been called to testify on Capitol Hill before the House Oversight and Government Reform Committee in December, a hearing that will almost certainly turn into an airing of grievances over Obamacare and his statements about voter stupidity. As John Davidson of the Texas Public Policy Foundation notes, Gruber’s lies have been very revealing when it comes to illustrating the original intentions of those who wrote and passed Obamacare:

In a 2009 interview with George Stephanopoulos of ABC News, President Obama emphatically rejected the notion that the individual mandate is a tax. He was adamant that it was a penalty and not a tax, reasoning that because people without health insurance sometimes end up in the emergency room, causing costs to rise for the rest of us, the individual mandate penalty was not a tax.

Then in 2012, White House attorneys argued before the Supreme Court that it was indeed tax, and repeatedly called it that before the Court, which in its ruling found that the only way the mandate could pass constitutional muster was if it is construed as a tax, not a penalty. In what is by now Gruber’s most famous video, he explains that the bill was “written in a tortured way to ensure that CBO did not score the mandate as taxes. If CBO scored the mandate as taxes the bill dies.” Clearly, he considers the mandate a tax, albeit one cleverly written not to be scored as such by the Congressional Budget Office, but a tax nonetheless.

This is a pattern. In one of the Gruber videos, he admitted that the purpose of the “Cadillac tax” on certain employer-sponsored health plans is to discourage employers from providing health insurance. The ultimate goal, Gruber explained, is to get rid of the tax subsidy for employer health plans altogether, albeit indirectly, by “mislabeling it, calling it a tax on insurance plans rather than a tax on people when we all know it’s a tax on people who hold those insurance plans.” At a town hall meeting in 2009, the president specifically said this was not the purpose of the Cadillac tax and that it had been “taken off the table.”

In terms of understanding Gruber’s unexpected honesty about his deceit, it could be that four years is just the distance necessary for people in politics to admit their failings. That seems to be the rationale for Sen. Chuck Schumer’s admission that passing Obamacare was a mistake.

Sen. Chuck Schumer upbraided his own party Tuesday for pushing the Affordable Care Act through Congress in 2010. While Schumer emphasized during a speech at the National Press Club that he supports the law and that its policies “are and will continue to be positive changes,” he argued that the Democrats acted wrongly in using their new mandate after the 2008 election to focus on the issue rather than the economy at the height of a terrible recession.

“After passing the stimulus, Democrats should have continued to propose middle-class-oriented programs and built on the partial success of the stimulus, but unfortunately Democrats blew the opportunity the American people gave them,” Schumer said. “We took their mandate and put all of our focus on the wrong problem–health care reform.”

The third-ranking Senate Democrat noted that just about 5 percent of registered voters in the United States lacked health insurance before the implementation of the law, arguing that to focus on a problem affecting such “a small percentage of the electorate made no political sense.”

The larger problem, affecting most Americans, he said, was a poor economy resulting from the recession. “When Democrats focused on health care, the average middle-class person thought, ‘The Democrats aren’t paying enough attention to me,'” Schumer said.

The health care law should have come later, Schumer argued, after Democrats had passed legislation to help the middle class weather the recession. Had Democrats pushed economic legislation, he said, “the middle class would have been more receptive to the idea that President Obama wanted to help them” and, in turn, they would have been more receptive to the health care law.

The interesting aspect of this is that Obama actually sold Obamacare as something very positive for middle-income families – emphasizing it would be non-disruptive to the marketplace, that if you liked your plan and doctor you could keep them, and that it would bring costs down for those Americans who already had insurance. He sold it as a positive good – but it was never actually going to do that. Only now, with the dawning of the post-Obama political era, can his fellow Democrats admit the law has failed to live up to that promise.

— Benjamin Domenech



Basically, if you like your plan, but don’t go out of your way to intentionally re-enroll, the kind and wise folks at HHS or state health exchanges might just pick a new plan – perhaps with different doctors, clinics, cost structures, and benefit options – for you. And if you want to switch back? Good luck once open enrollment is closed. There’s always next year.

A hassle? Maybe. But have faith: They know what’s best.

Presumably the idea came up because, even though by some measures premiums aren’t rising by large amounts this year, premiums for many of the lowest cost and most popular plans from last year are rising quite a bit. And since HHS decided over the summer to institute auto-renewal, and since the majority of Obamacare enrollees are expected to take no action and thus stay in their current plans, the reality is that under the current system a lot of enrollees are likely to see large premium hikes, just because they didn’t shop around for a new plan.

This sort of problem was more or less inevitable with automatic renewal, which was probably instituted as a way to shore up enrollment and prevent too much attrition in year two. The easy, straightforward way to fix it would be to turn auto renewal off. But that might result in lower enrollment. And anyway, why go the obvious route when there’s the possibility of having federal and state health bureaucrats make even more choices for you?

This isn’t an actual rule yet; it’s just a proposed rule. But the fact that Obamacare’s overseers are thinking like this says a lot – about their government-knows-best bureaucratic mentality and about the complications of the law itself.

SOURCE: Peter Suderman, Reason


The Obama administration has admitted that it inflated Obamacare enrollment numbers twice this year – including in testimony to Congress – thanks to an error in the way health insurance numbers were conflated with dental insurance figures.

The exaggeration, which HHS Secretary Sylvia Mathews Burwell said was an “unacceptable” mistake, inflated the reported number enrolled in Obamacare by 400,000. House Republicans first spotted the issue, and say that blaming the bad numbers on mistaken data “strains credulity.” If you take the dental insurance customers out of the latest administration Obamacare report, the enrollment number is closer 6.7 million now.

Burwell and HHS officials did not publicly explain how the mistake happened. But one administration official told POLITICO a topline number for paid enrollment – different data than HHS usually uses in its enrollment reports – was used for Medicare chief Marilyn Tavenner’s testimony on the Hill in September. She said at the time that 7.3 million people were covered as of mid-August.

The problem was uncovered by House Oversight Republicans after receiving more detailed information from HHS this month.

Burwell pledged to take steps so that “this kind of mistake does not occur again after we understand why it happened.”

Several top Republicans saw it as far more than an error, though. House Oversight Chairman Darrell Issa insisted “HHS must provide a clear and detailed account of who knew about this decision and when they knew it.” House Majority Leader Kevin McCarthy tweeted, “Administration double counts #Obamacare enrollees to reach enrollment goal” of 7 million.

SOURCE: Brett Norman, Politico


While much attention is focused on the price of Obamacare’s premiums, a new analysis by HealthPocket takes a look at how deductibles on these policies compare to last year – as well as how they stack up against other types of coverage – like employer-based plans.

As was the case in 2014, lower-tiered Obamacare policies – like the bronze and silver plans – tend to be high-cost sharing plans with lower monthly premiums than other policies, but much more costly annual deductibles.

The Internal Revenue Service considers any plan that has an annual deductible of $1,300 or more for individuals or $2,600 for families, a high-deductible plan. Most middle-ground Obamacare plans fall into this category – and according to HealthPocket, this year’s deductibles are even higher than last year.

Indeed, the study found that the average deductible for 2015 Bronze-level policies, the lowest tiered plan, is about $5,181 for individuals – up from $5,081 last year and about four times the IRS’s benchmark for high-deductible plans. Families who enroll in these plans have deductibles averaging about $10,500 deductibles.

The analysis also compared the deductibles on these plans to similar employer-sponsored policies, and found they were about 326 percent higher than the employer-based plans.

SOURCE: Brianna Ehley, Fiscal Times


The Food and Drug Administration announced sweeping rules on Tuesday that will require chain restaurants, movie theaters and pizza parlors across the country to post calorie counts on their menus. Health experts said the new requirements would help combat the country’s obesity epidemic by showing Americans just how many calories lurk in their favorite foods.

The rules will have broad implications for public health. As much as a third of the calories that Americans consume come from outside the home, and many health experts believe that increasingly large portion sizes and unhealthy ingredients have been significant contributors to obesity in the United States.

“This is one of the most important public health nutrition policies ever to be passed nationally,” said Margo Wootan, director of nutrition policy at the Center for Science in the Public Interest. “Right now, you are totally guessing at what you are getting. This rule will change that.”

The rules are far broader than consumer health advocates had expected, covering food in vending machines and amusement parks, as well as certain prepared foods in supermarkets. They apply to food establishments with 20 or more outlets, including fast-food chains like KFC and Subway and sit-down restaurants like Applebee’s and The Cheesecake Factory.

Perhaps the most surprising element of the new rules was the inclusion of alcoholic beverages, which had not been part of an earlier proposal. Beverages served in food establishments that are on menus and menu boards will be included, but a mixed drink at a bar will not, F.D.A. officials said.

“It’s much tougher than the original,” said Marion Nestle, a professor in the department of nutrition, food studies and public health at New York University. “I’m amazed. It never occurred to me that alcohol would make it in.”

The new rules will take effect a year from now, and seem likely to face legal and political challenges from some parts of the food industry, including grocery and convenience stores that sell prepared foods for takeout.

SOURCE: Stephanie Strom, New York Times


As Illinois entered its 2013 fiscal year, the Medicaid budget faced a shortfall of $2.7 billion. The state had begun implementing some of the reforms that other states are incorporating, such as shifting more Medicaid recipients into private sector Medicaid managed care organizations (MCOs), but it needed to find even more savings.

In response, Illinois state Representative Patti Bellock garnered bipartisan support to pass the SMART Act in 2012, which included several Medicaid reforms. One of the most important of those was a provision to establish the Illinois Medicaid Redetermination Program (IMRP) to “redetermine” if Medicaid enrollees were still eligible to participate.

The federal government requires states to do an annual audit of the Medicaid rolls to ensure that all enrollees are eligible, but in most states few people are actually removed. Bellock wanted to use an outside, private sector firm, Virginia-based Maximus, to audit the state’s 1.3 million Medicaid case files – which represents about 2.7 million individuals. The company has more extensive databases than the state and would likely identify more ineligible Medicaid beneficiaries.

And it did just that. Maximus recommended removing 249,912 cases by the end of February 2014, according to the state. By law a state employee has to review the recommendations and decide if cancellation is appropriate. The state removed 148,283 cases (representing 234,000 individuals) from the Medicaid rolls.

However, the American Federation of State, County and Municipal Employees (AFSCME) filed suit claiming that most of the work should be done by state bureaucrats, and a federal judge agreed. Although the outside vendor is still involved, [its] role has been reduced significantly. Even so, the state has continued to identify people who should be dropped from the Medicaid rolls. According to state data, 173,469 Medicaid cases have been cancelled between February and September.

Not all of these cancellations are the result of fraud. Many simply did not respond to the state’s repeated inquiries. Or a Medicaid beneficiary might get a job or a raise or coverage through a spouse and is no longer eligible for Medicaid but doesn’t notify the state. Or the beneficiary moves out of state without realizing that Medicaid is a state-based plan. And the Illinois audit found that more than 8,000 dead people were still on the state’s Medicaid rolls.

The state has struggled to determine how much money the redetermination process has saved because Medicaid covers different populations with vastly different health care costs. For example, the Kaiser Family Foundation estimates that Illinois children cost about $2,630 per year (2010), while their mothers cost $3,717 – those groups make up the large majority of Medicaid beneficiaries. Disabled and long-term care recipients are much more costly. Canceling thousands of cases saves a lot of federal and state taxpayer money.

SOURCE: Merrill Matthews, Institute for Policy Innovation


With the prices for some common generic medicines soaring over the past 18 months, state and federal lawmakers are trying to find relief for patients struggling to pay.

On Thursday, a Senate panel convened to investigate price increases for generic drugs. Separately, Senators Amy Klobuchar and John McCain will revive stalled legislation to allow some prescription imports from Canada. And Maine is testing out a hotly contested new law that allows its residents to buy drugs from overseas, flouting United States policy.

One half of generic medicines went up in price between last summer and this summer; about 10 percent more than doubled in cost in that time, with some common medicines rising by over 500 percent, new data released in connection with a Congressional hearing found. These include thyroid replacement hormone, the antibiotic doxycycline, the heart pill digoxin and the asthma pill albuterol.

“Generics have played an important role in making medicine affordable for millions of people,” said Senator Bernie Sanders, independent of Vermont and chairman of the Senate Subcommittee on Primary Health and Aging, who held this week’s hearing with Representative Elijah E. Cummings, Democrat of Maryland. “I worry that we’re seeing the end of that now,” Mr. Sanders said in a telephone interview. “This should be highlighted and remedied.”

Because the United States does not regulate drug pricing or negotiate prices nationally like other countries, generic medicines have long been a safety valve for American patients, allowing them to obtain needed medicines at lower costs. Brand name medicines are granted patent protection for a number of years after they enter the market. Historically, after the patent expires, generic copies have entered the fray, bringing prices down, often sharply.

But that pattern is changing, researchers and policy makers say.

The cost of many generic medications has increased so much over the past year that prices for many common generic drugs in the United States have surpassed those of their brand-name equivalents in other developed countries, a new analysis by the website Pharmacychecker, which guides patients in the mail order purchase of medications, has found.

SOURCE: Elisabeth Rosenthal, New York Times