Obamacare’s Chief Architect Threatens Stability of the Law

Following the D.C. Circuit Court’s decision this week that Obamacare subsidies could not be offered in states that didn’t set up their own exchanges, pundits have lined up to offer their opinion of what the drafters meant.

By and large the reaction on the left has been to agree that Obamacare is inarticulately worded, but that the clear intent of the drafters was to provide subsidies. As Ezra Klein writes for Vox,

“The Halbig case could destroy Obamacare. But it won’t. The Supreme Court simply isn’t going to rip insurance from tens of millions of people in order to teach Congress a lesson about grammar.

. . . The plaintiffs rely on an unclearly worded sentence in the law to argue that Congress never intended to provide subsidies in federally-run exchanges so the subsidies that are currently being provided in those 36 states are illegal and need to stop immediately.

This is plainly ridiculous. The point of Obamacare is to subsidize insurance for those who can’t afford it. The point of the federal exchanges is to make sure the law works even in states that can’t or won’t set up an exchange.”

One of the law’s chief architects, Jonathan Gruber, agreed.

“It is unambiguous this is a typo,” Gruber told MSNBC’s Chris Matthews. “Literally every single person involved in crafting of this law has said it’s a typo, that they had no intention of excluding the federal states.”

But it’s not plainly ridiculous, and it’s not a typo. In fact, it’s exactly what the law’s architects—including Gruber himself—clearly intended.

“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,” said Gruber in January of 2012.

Unsurprisingly, Obamacare supporters like The New Republic’s Jonathan Cohn immediately leapt to Gruber’s defense. Not only was the Obamacare provision a typo, Gruber’s remarks explaining them were a “speak-o.”

“I honestly don’t remember why I said that. I was speaking off-the-cuff. It was just a mistake,” Gruber told Cohn. “Congress made a mistake drafting the law and I made a mistake talking about it.”

That could have been the end of it, except now it appears Gruber has been caught telling a little bit of a fib-o. John Sexton at Breitbart has found another instance of Jonathan Gruber—this time in prepared remarks—making the exact same connection between subsidies and the requirement for state’s to set up their own exchanges.

“[B]y not setting up an exchange, the politicians of a state are costing state residents hundreds and millions and billions of dollars,” Gruber said in his speech. “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.”

And that’s exactly the way the Obama Administration and other architects of the law wanted it to work. They didn’t want the hassle of setting up a robust federal exchange with connectivity in a bunch of states (and given the utter disaster that was Obamacare.gov it’s easy to understand why) so they wanted to coerce states into doing the work for them. Since the drafters assumed that everyone would love the idea of taxpayer-subsidized insurance plans, they figured it would be politically impossible for states to refuse to set up their own exchanges.

Only in hindsight, when setting up Obamacare exchanges seemed well beyond the capability of some states and philosophically anathema to others, did the drafters realize their mistake. So it’s understandable why they changed their tune. It’s easy to see why they’re now laughing off those who want to take the plain words of the law at face value. It’s understandable, but it’s wrong.