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Obamacare architect in 6th video: 'Mislabeling' helped us get rid of tax breaks

Jonathan Gruber

Story highlights

  • MIT economist Jonathan Gruber is considered the architect of Obamacare
  • Videos where Gruber insults voters and explains the law have recently emerged
  • Opponents of Obamacare see this as evidence of the law's ill will
In a 2011 conversation about the Affordable Care Act, MIT economist Jonathan Gruber, one of the architects of the law more commonly known as Obamacare, talked about how the bill would get rid of all tax credits for employer-based health insurance through "mislabeling" what the tax is and who it would hit.
In recent days, the past comments of Gruber -- who in a 2010 speech noted that he "helped write the federal bill" and "was a paid consultant to the Obama administration to help develop the technical details as well" -- have been given renewed attention.
In previously posted but only recently noticed speeches, Gruber discusses how those pushing the bill took part in an "exploitation of the lack of economic understanding of the American voter," taking advantage of voters' "stupidity" to create a law that would ultimately be good for them.
The issue at hand in this sixth video is known as the "Cadillac tax," which was represented as a tax on employers' expensive health insurance plans. While employers do not currently have to pay taxes on health insurance plans they provide employees, starting in 2018, companies that provide health insurance that costs more than $10,200 for an individual or $27,500 for a family will have to pay a 40 percent tax.
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"Economists have called for 40 years to get rid of the regressive, inefficient and expensive tax subsidy provided for employer provider health insurance," Gruber said at the Pioneer Institute for public policy research in Boston. The subsidy is "terrible policy," Gruber said.
"It turns out politically it's really hard to get rid of," Gruber said. "And the only way we could get rid of it was first by 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 White House press secretary said at a press briefing in 2010: "I would disagree with your notion that it is a tax on an individual since the proposal is written as a tax on an insurance company that offers a plan.")
The second way was have the tax kick in "late, starting in 2018. But by starting it late, we were able to tie the cap for Cadillac Tax to CPI, not medical inflation," Gruber said. CPI is the consumer price index, which is lower than medical inflation.
Gruber explains that by drafting the bill this way, they were able to pass something that would initially only impact some employer plans though it would eventually hit almost every employer plan. And by that time, those who object to the tax will be obligated to figure out how to come up with the money that repealing the tax will take from the treasury, or risk significantly adding to the national debt.
"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."
Unions and employers who object in 2018, he noted, "at that point if they want to get rid of it they're going to have to fill a trillion dollar hole in the deficit...It's on the books now."
(When the Cadillac tax was first rolled out, it was explained by Obamacare backers as a tax that would only impact those with "high end plans" -- not all employer sponsored plans. A White House economic adviser in 2009 set "the record straight" by saying "the excise tax levied on insurance companies for high-premium plans, the so-called 'Cadillac tax,' will affect only a small portion of the very highest cost health plans -- a total of 3% of premiums in 2013.")
Gruber's are at about the 30:38 mark here.
Former White House press secretary Jay Carney told CNN that Gruber's remarks in general were "very harmful politically to the president."
Gruber "speaks from the Ivory tower with remarkable hubris about the American voter and by extension the American Congress," Carney told The Lead with Jake Tapper. "Any health care reform that sought to control costs and expand insurance would involve winners and losers. And that's always going to be the case."
Many of the videos were discovered by a Philadelphia-area financial adviser named Rich Weinstein who has spent the last year researching Obamacare after his family insurance premiums doubled. Weinstein told CNN that he had assumed, incorrectly, that since he liked his health insurance plan and he had insurance, he wouldn't be much impacted by the new law.