The Smoking Gruber Gun?
I had seen people in print refer to this, but it helps to watch the actual video. Many of my libertarian brethren (and sistren) think this is obviously Gruber saying the feds intended for the subsidy carrots to induce the states to set up their exchanges for the ACA. However, the one thing that troubles me in that interpretation is his use of the term “backstop.” Watch the short clip and then consider my two interpretations of what Gruber is saying.
Option #2 (progressive escape hatch): Gruber is saying that if the state doesn’t set up an exchange, then the feds will have to, and of course the people in that state are then eligible for subsidies too. When Gruber warned about the citizens losing out on tax credits, he was merely referring to the interim period when the bungling and slow-moving feds were trying to set up their own exchange.
I am leaning toward Option #1, and my strongest bit of evidence is the “billions of dollars” line. If Gruber had been merely referring to a one-shot missing out of subsidies, would the number have been that big? Well, it’s hard to say, since this is Gruber after all–maybe he had some crazy scenario in mind where the feds drag their feet for years, and he wants the states to do the policy he wants, so why not say whatever pops into his head?
I’m genuinely not sure how to interpret this video. You would think it would be decisive, and yet he doesn’t (in my mind) come down clearly enough in one camp or the other to be absolutely certain.
(Naturally, I am here referring to this one, short video. There is other evidence we could examine to determine whether the infamous four words in the legislation were a typo or not.)
I think option 1 is the correct interpretation of what Gruber is saying, I just think that his statement was factually incorrect. Now there are multiple reasons why he may have made a factually incorrect statement. He could have been misremembering things, or he could have been speculating to his audience, or in 2012 he might have read that piece of the legislation and assumed from the language that it was intended to limit subsidies to state-run exchanges without relying on his knowledge of the process. But it seems implausible that that was Congress’ intent, given that before Gruber’s statement, as far as I know not a single soul, among the people who drafted, supported, or reported on the legislation ever made a statement to that effect. And it would be strange for a provision that incentivized states to do something to go completely unannounced; otherwise how could it have an incentive effect?
And as I said in the last thread, all of Gruber’s models, even when they assumed that some states would not establish exchanges, always made the assumption that everyone would be eligible for subsidies:
http://www.motherjones.com/kevin-drum/2014/07/gruber-it-was-just-mistake
Bob, actually I think there’s a possibility that option 2 may be the right one. Kevin Drum doesn’t quote Gruber’s full defense in his post, but in the full defense Gruber suggests that option 2 is a possibility:
http://www.newrepublic.com/article/118851/jonathan-gruber-halbig-says-quote-exchanges-was-mistake
“I might have been thinking that if the federal backstop wasn’t ready by 2014, and states hadn’t set up their own exchange, there was a risk that citizens couldn’t get the tax credits right away. …
But there was never any intention to literally withhold money, to withhold tax credits, from the states that didn’t take that step. That’s clear in the intent of the law and if you talk to anybody who worked on the law. ”
But whether option 1 or option 2 is right doesn’t alter my confidence in what Congress’ intent was.
By the way, just to give you some ammunition, apparently Gruber made the same statement in two different speeches that month: The New Republic article links to this audio from a different speech where he makes the same statement:
http://www.youtube.com/watch?v=LbMmWhfZyEI
Bob, actually I think there’s a possibility that option 2 may be the right one. Kevin Drum doesn’t quote Gruber’s full defense in his post, but in the full defense Gruber suggests that option 2 is a possibility:
http://www.newrepublic.com/article/118851/jonathan-gruber-halbig-says-quote-exchanges-was-mistake
“I might have been thinking that if the federal backstop wasn’t ready by 2014, and states hadn’t set up their own exchange, there was a risk that citizens couldn’t get the tax credits right away. …
But there was never any intention to literally withhold money, to withhold tax credits, from the states that didn’t take that step. That’s clear in the intent of the law and if you talk to anybody who worked on the law. ”
I should make clear that whether option 1 or option 2 is right doesn’t change my beliefs as to what Congress’ intent was.
By the way, just to give you some ammunition, apparently Gruber made the same statement in two different speeches that month; the New Republic post links to an audio clip from a different speech where he says the same thing. So this is something that seemed to be consistently going through his head that month.
The whole thing is really weird. I am open to the possibility that it was genuinely a typo, but the more Gruber talks about it, the less sense it makes. If “there was never any intention to literally withhold money” then he was insane in that video, and he didn’t sound insane (or stupid or ignorant).
Was it common knowledge among op ed writers when the drinking age stuff occurred, that it was due to federal highway dollars? (Maybe it was, I don’t know.) I don’t think the federal government usually goes out of its way to announce to Americans, “This is how we’re coercing your state reps to do our bidding.”
“I don’t think the federal government usually goes out of its way to announce to Americans, “This is how we’re coercing your state reps to do our bidding.”” Well, obviously they wouldn’t put it in those terms, but they were open about similar “coercive” provisions: the individual mandate, the employer mandate, and the Medicaid expansion. And from day 1, there were constitutional concerns about the Medicaid expansion. It seems that this would be the only case where they wouldn’t announce that they’re incentivizing the states to do something.
Now I don’t know how well the details of the drinking age bill were publicized in those days, but I think the process of drafting and amending the healthcare bill was much more heavily publicized. It seems odd that there wouldn’t even be a small mention in some Congressional hearing or markup where Max Baucus would say, “We’re tying subsidizes to states setting up their own exchanges.”
“If “there was never any intention to literally withhold money” then he was insane in that video, and he didn’t sound insane (or stupid or ignorant).” Bob, obviously you can make a false statement without being sane. How can you tell whether what someone is saying is factually correct or not simply by looking at them?Suppose in January of 2012, Gruber read the subsidy provision of Obamacare, and saw the phrase “exchange established by the state”, and simply assumed that meant that Congress was trying to incentivize the states to set up their own exchange. Then how would his face look any different than what it looks like?
Or suppose option 2 were right. Then how would his face look any different than what it looks like? Neither scenario would preclude him from speaking with absolute confidence without mental reservation.
*without being insane
I don’t know Keshav, it seems like a leap to consider Congress’ intent on an act that it never read or discussed before passing. The SCOTUS decision seemed to be that state exchanges meant all exchanges because if it was just state exchanges that would be bad and the law is good so it must mean something else. It seems strange that the Federal Government was pushing the states to set up exchanges if there was no incentive for them to do so. I think Grubbers comments have proven to be ill-advised but I see no reason to think he misspoke. Is it possible that this whole thing was designed to make the states that refused look bad and then later the federal government would swoop in with new legislation to save the day?
“I don’t know Keshav, it seems like a leap to consider Congress’ intent on an act that it never read or discussed before passing.” Grane Peer, members of Congress didn’t read the entire bill line by line, but there was large amounts of discussion (at least by liberals) on the various provisions of the bill, both major and obscure. And we can certainly talk about the intent of the people who drafted it. The nature of the subsidies and the exchanges were extensively discussed in public, so it seems odd that (as far as I know) not a single soul, inside or outside of Congress, would ever mention that they were incentivizing the states in this way.
“The SCOTUS decision seemed to be that state exchanges meant all exchanges because if it was just state exchanges that would be bad and the law is good so it must mean something else.” No, what the decision said is that if at all possible, the Court should try to interpret the law in a way that would be consistent with Congress’ intent to improve insurance markets. So if a particular interpretation of the law were to devastate insurance markets in a way that would have been clearly foreseen by Congress, then that interpretation is less likely to be correct.
“It seems strange that the Federal Government was pushing the states to set up exchanges if there was no incentive for them to do so.” Well, whether you consider it strange or not, the overwhelming majority of liberals both inside and outside of Congress believed that most states would set up exchanges. They (and I) thought that as long as you gave the states the funding necessary to do it, they would have no reason not to do it. The state “opt out” movement was started well after the bill was enacted. So why would the drafters of that provision find something strange when pretty much everyone else didn’t?
“I think Grubbers comments have proven to be ill-advised but I see no reason to think he misspoke.” Well two reasons to think he misspoke are that (1) it’s something that no one else seems to have ever said in any context and (2) his own models always made the assumption that people in all states would receive subsidies, even in models where some states didn’t set up their own exchanges.
“Is it possible that this whole thing was designed to make the states that refused look bad and then later the federal government would swoop in with new legislation to save the day?” Well, why would they do something in this case that’s different than what they did in the Medicaid case? Couldn’t they have tried to make states look bad by keeping the Medicaid expansion provision a secret, that way people in red states would stop getting Medicaid and the federal government could swoop in with new legislation? Yet they didn’t do that: lots of members of Congress, journalists, activists, etc. talked about how states were being incentivized to expand Medicaid. It’s strange that they wouldn’t do the same thing here.