- - Tuesday, July 28, 2015

With 50+ million people expected to lose their plan, Gruber puts his salesman hat back on — but what do you expect? He’s Jonathan Gruber.

“The bottom line is that 80% of Americans get insurance from their employer or the Government and they’re not affected.” — Jonathan Gruber 

Finally the media is starting to play catch up on the Affordable Care Act. Its been over five years since the law passed, and while the Administration and Friends are taking a victory lap, the rest of us are still finding out (the hard way) what’s in the law.

In late 2013, when millions lost their plans, the country learned that “if you like your plan, you can keep your plan” was simply a false marketing slogan, now labeled as the lie of the year. For those of us in the individual market that lost our plans, we were called “anecdotal” or mocked for having junk plans. Jonathan Gruber was at the forefront of building that narrative, selling the story, smugly insisting that the other 80% of those with company plans were not affected. The media eagerly bought what Gruber was selling. Why not? After all, he’s Jonathan Gruber, an architect of the Affordable Care Act. Who would know better than he? That was back before “Gruber” became a verb.

Only recently has the trail led to the impact the ACA will have on the company plans of 158 million Americans- part of the 80% Gruber insisted would be untouched- and noticed the onslaught ahead. A recent Investor Business Daily article is one of the few that looked at the amount of people that will lose their company plans as a direct result of the ACA. The article links to a March 2011 report by the non-partisan Congressional Budget Office which shows that in the years 2011-2015 the ACA was expected to cause company plans to actually increase (2011-2013: 3 million people per year, 2014: 6 million, 2015: 3 million) and then cause a relatively minor decrease of about 1 million people per year in company plans from 2016 and beyond.

The IBD article then flashed forward to the January 2015 version of the CBO report. In that more recent report, the picture is dramatically changed. Where previously calendar years 2016-2021 estimated a total decrease in company plans of 5 million people, the new estimate jumps tenfold; now a whopping 52 million people are expected to lose their plans as a direct result of the Affordable Care Act. And that number grows by another 9 million per year onward.

Let’s go back to March 2011, the date of the first CBO report. Former CBO director Douglas Holtz Eakin discuss the very topic at the Pioneer Institute. Mr. Holtz Eakin took the position that the CBO numbers don’t pass the “laugh test” and that the ACA will encourage companies to shift massive amounts of people off company plans and onto the exchanges. That shift in wonk language is known as “crowd out.”

Next up to the podium is none other than Jonathan Gruber. Mr. Gruber’s “crowd out” numbers are suspiciously similar to those of the 2011 CBO report; his modeling also concluded that very few would lose their employer plans. Mr. Gruber’s estimates are based on the experience of Romneycare, where there was “crowd in” and employer-based enrollment actually increased; therefore, there’s no reason to believe the rest of the country will behave differently than how Massachusetts reacted to Romneycare.

Mr. Gruber has often noted that the two laws are essentially the same, joking that the ACA is Romneycare with 3 zeros added to the end. Except that characterization is dead wrong. Romneycare did not require the Cadillac Tax to finance it, since Sen. Ted Kennedy secured hundreds of millions of dollars from the federal taxpayer.

The ACA had no such luxury. It had to be financed from some source and we know that the Cadillac Tax is a significant financing mechanism, nudging employers to drop tax- free coverage and replace that coverage with taxable wages. Mr. Gruber has known this to be true since before the law passed; he documented the concept to Max Baucus’ Senate Finance Committee in May of 2009. 

Mr. Gruber goes on to explain his expertise in the field and study of “crowd out,” where he acknowledges it was he and fellow ACA architect David Cutler that actually coined the term “crowd out” in the first place. Now he’s been proven dead wrong — by a factor of 10 — as document by the CBO.

Which brings us to the most recent salesmanship of Mr. Gruber. Just weeks ago at the Sun Life Financial Conference, Mr. Gruber once again puts on his salesman hat to claim “there was no evidence of any major disruption to the existing employer insurance market” and that the law leaves “most Americans alone, fixing what was wrong with the system.” (Its like #Grubergate never happened.)

While that’s clearly not the case given the 2015 CBO numbers, Mr. Gruber does properly reveal that there is an “enormous lack of understand of what the law does.” Yes, I completely agree. The “lack of understanding” is due to salesmen disguised as economists misdirecting the American people.

This will not go on forever. The American people will see for themselves that what the law always intended and actually accomplishes is to kick employees off their plans for the purpose of generating tax revenue. Its already begun. Mr. Gruber, if you’ve been surprised by the tenor and tone of the political opposition to the law thus far, I don’t think you’ve seen anything yet.

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