For a sense of exactly how the deceptions that
Obamacare architect Jonathan Gruber has described played out in the
selling of the law, it’s worth reading Jake
Tapper’s piece at CNN on Gruber, Obama, and the health law’s
Cadillac Tax.
Tapper points to a statement by President Obama at a July 2009
health care townhall on the reasoning behind the tax, and then
juxtaposes it with a recently unearthed remark by Gruber indicating
that the purpose of the tax is not what Obama described. In fact,
it’s pretty much the opposite.
At a town hall meeting on health care on July 23, 2009 in Shaker
Heights, Ohio, Obama explained
that the thinking of the Cadillac tax was to target plans
that spend unnecessarily and excessively, thus driving up health
care costs, such as a $25,000 plan, “so one that’s a lot more
expensive and a lot fancier than the one that even members of
Congress get.”The thinking, Obama explained, was that “maybe at that point
what you should do is you should sort of cap the exclusion, the tax
deduction that is available, so that we’re discouraging these
really fancy plans that end up driving up costs.”The President at that point hadn’t yet signed off on a Cadillac
tax (he would eventually) but he did make the pledge: “what I said
and I’ve taken off the table would be the idea that you just
described, which would be that you would actually provide — you
would eliminate the tax deduction that employers get for providing
you with health insurance, because, frankly, a lot of employers
then would stop providing health care, and we’d probably see more
people lose their health insurance than currently have it. And
that’s not obviously our objective in reform.”
Gruber’s
explanation of the thinking was a little bit different. To be
precise, it was the opposite of what Obama said.
Gruber starts by noting that economists really don’t like the
tax subsidy for employer-provided health insurance, that it’s
terrible public policy, but that politically it’s very difficult to
end. Here’s how Tapper describes the rest of what Gruber
says.
Gruber said the only way those pushing for Obamacare could get
rid of the tax subsidy for employer provider health insurance was
to tax the more generous, or Cadillac, plans — “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.”The second way was have the tax kick in “late, starting in 2018”
and have its rate of growth tied to the consumer price index
instead of to the much higher rate of medical inflation.
Eventually, the 40% tax on the more expensive plans would impact
every employer-provided insurance plan.“What that means is the tax that starts out hitting only 8% of
the insurance plans essentially amounts over the next 20 years
essentially getting rid of the exclusion for employer sponsored
plans,” Gruber said. “This was the only political way we were ever
going to take on one of the worst public policies in America.”
As Tapper writes, this is exactly what Obama promised
had been “taken off the table.”
This is an issue on which Gruber can presumably speak with some
authority. By Gruber’s
own account, he was in the room with President Obama when the
Cadillac tax was designed, and that it was designed in order to
avoid the political backlash that Obama believed was sure to
accompany any effort to get rid of the employer tax exclusion in a
straightforward manner.
Now, as it happens, I think Gruber was right on the merits of
the subsidy for employer benefits: It’s bad policy.
But Obama didn’t really make the case that it was bad policy.
Instead, he said that ending the employer tax break
was something he wouldn’t do, and that he didn’t support ending it
because doing so would lead to negative consequences.
And then, behind closed doors, he said the more or less the
opposite: He agreed that it was a problem, and that it needed to
go, and worked with Gruber to devise a mechanism that would
eventually end it or significantly reduce its effects.
Even if you like the result, even if you agree that the tax
exclusion was a problem that needed to be addressed, this is not a
good policy process. It’s built on manipulation and obfuscation
rather than on straightforward argument about the merits of a
change, and it ends up producing workaround policies that are made
as much to conceal their purpose as to produce a desired effect.
It’s not about convincing the public; it’s about misleading them
and hoping they don’t catch on.
And, as a result, it’s the sort of strategy that inevitably
backfires, even when it “works” in the sense that it produces a
legislative win. It attempts to avoid one sort of political
backlash, but ends up creating another. It’s
self-defeating.
With Obamacare, the results are plain to see. If you want to
understand why public support for the health law is
so low, this sort of thing is one of the reasons why.
People generally don’t like processes designed to mislead them, and
with Obamacare, they feel misled because, well, they
were.
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