Contra NYT Report, Gruber Said States Without Exchanges Wouldn't Receive Tax Credits

Jonathan Gruber
Jonathan Gruber / AP
May 26, 2015

New York Times article about ambiguous language on tax subsidies in the Affordable Care Act, which could derail the law, quotes multiple authors of the legislation who claim it was simply a mistake, except that's not what Obamacare architect Jonathan Gruber had to say in January 2012.

Plaintiffs in a case before the Supreme Court, King v. Burwell, argue that Obamacare only provides subsidies for insurance marketplace "established by the state." Those last four words, quoted from the law's text, are key to their argument that Obamacare cannot legally provide subsidies to states with federal exchanges:

The answer, from interviews with more than two dozen Democrats and Republicans involved in writing the law, is that the words were a product of shifting politics and a sloppy merging of different versions. Some described the words as "inadvertent," "inartful" or "a drafting error." But none supported the contention of the plaintiffs, who are from Virginia.

But Gruber, who became infamous last fall when video surfaced of him discussing the "stupidity" and "lack of economic understanding" of American voters while lauding "lack of transparency" in getting Obamacare passed, said what the plaintiffs are arguing. And without federal subsidies for millions of Americans, the law collapses.

"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," Gruber said. "So you're essentially saying to your citizens, ‘You're going to pay all the taxes to help all the other states in the country.’ I hope that that's a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges and that they'll do it, but once again, the politics can get ugly around this."

Gruber later told The New Republic he was speaking off the cuff and made a mistake. Gruber has used that excuse before; when he testified before Congress about his series of insulting remarks about American voters and too-honest ones about Obamacare, he repeatedly apologized for being too "glib."