Gruber's 2012 Comments on Subsidies May Help Gut Obamacare at Supreme Court

By Susan Jones | November 13, 2014 | 8:41am EST

M.I.T. economist Jonathan Gruber helped to write The Affordable Care Act.

( - M.I.T. economist Jonathan Gruber is under fire for saying that Americans' "stupidity" allowed Obamacare to pass, but something else he said could end up gutting the law he helped to write.

Gruber now insists that the authors of the Affordable Care Act never intended to deny subsidies to people in states that refused to set up their own health care exchanges.

So why does the law explicitly restrict subsidies to health insurance purchased in exchanges "established by the State"?

Two years ago, Gruber indicated that the law's several references to "State health subsidy programs" were a "political" calculation "to sort of squeeze the states" to set up their own exchanges.

"I think 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 (subsidies)," Gruber said at a lecture in 2012. "But your citizens still pay the taxes that support this bill. 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’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."

As it turns out, 36 states did not set up their own health insurance exchanges. The federal government did it for them. And now the law's language -- which was intended to prod states to set up their own exchanges -- may come back to haunt the law's authors.

On Tuesday, Gruber told Boston's WGBH-TV that denying subsidies to people in the federal exchanges would be a "misreading" of the law.

The argument that "states that don't run their own exchanges shouldn't deliver subsidies to patently at odds with what the law is trying to do," Gruber said this week. "If you ask the people that wrote the law, this is not what they intended."

Last week, the U.S. Supreme Court agreed to examine whether the Affordable Care Act allows subsidies (tax credits) for people who purchase health insurance in the federally run exchanges.

Gruber told WGBH he "certainly hopes" the Supreme Court will see the law's intention. "I mean, I think it would be an enormous tragedy if they didn't. Any sensible reading of this law shows the intention."

Gruber noted that the Affordable Care Act says people are not required to buy health insurance if it costs more than 8 percent of their income. "If we get rid of these subsidies, 99 percent of the people who get these subsidies could not buy health insurance for less than 8 percent of income. Why would they (Congress) put in a clause that applies to the entire population? It makes no sense. Basically, it would effectively kill the whole thing if you -- if you get rid of these subsidies and 99 percent of people can't afford health insurance and the law unravels. Why would congress write a law that unravels itself?"

On Friday, CNN talk show host Michael Smerconish, a lawyer, said Gruber's 2012 remarks seem to support the plaintiffs who are challenging Obamacare subsidies in the case soon to be heard by the Supreme Court: "I suspect they'll try to use his argument, his verbiage, in bringing down Obamacare," he said.

Also See:

Obamacare Architect: Americans ‘Too Stupid to Understand’

Obamacare Architect: We Relied on 'Lack of Transparency,' 'Stupidity of American Voter'

MRC Store