One of the architects of Obamacare has changed his statement on state exchanges and federal subsidies.
Federal courts in Washington, D.C., and Richmond, Virginia, this week issued opposing rulings on whether state residents can get tax credits from the federal government if their state did not set up its own health care exchange.
In an interview on MSNBC Tuesday, MIT economist Jonathan Gruber, who helped design the Affordable Care Act, dismissed the D.C. court’s position – one he advocated in a 2012 speech. On Friday, Gruber said that was a “speak-o” similar to a typo, and that he didn’t mean what he said in 2012.
“It is unambiguous this is a typo. Literally every single person involved in the crafting of this law has said that it’s a typo, that they had no intention of excluding the federal states and why would they?” Gruber said.
“Look, the law says that people are only subject to the mandate if they can afford insurance, if it’s less than 8 percent of their income,” Gruber continued. “If you get rid of these subsidies, 99 percent of the people who would get subsidies can no longer afford insurance, so you destroy the mandate. Why would Congress set up the mandate and go through all that political battle to allow it to be destroyed? It’s just simply a typo, and it’s really criminal that this has even made it as far as it has.”
But on Jan. 18, 2012, Gruber spoke before the Noblis Innovation and Collaboration Center in Falls Church, Virginia, when an audience member asked: “It’s my understanding that if states don’t provide [exchanges], then the federal government will provide them for the states.”
Gruber responded that was not correct.
“What’s important to remember politically about [Obamacare] 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,” he said. “But, you know, once again the politics can get ugly around this.”
After the law was enacted, Gruber became a consultant for state governments such as Wisconsin, Minnesota and Colorado to set up their exchanges, according to Forbes.
The two contradictory videos were first brought to the public’s attention by Ryan Radia of the Competitive Enterprise Institute, a conservative think tank, and then highlighted by Peter Suderman of Reason, a libertarian magazine and website.
On Friday, Gruber told The New Republic, a liberal publication: “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. My subsequent statement was just a speak-o—you know, like a typo.”
However, another audio clip found Gruber saying at another venue in January 2012 that not having a state exchange would “undercut the whole purpose of the bill,” and added, “if your governor does not set up an exchange, you are losing hundreds of millions of dollars in tax credits that could be delivered to your citizens.”
This story has been updated to include a explanation from Gruber.