Obamacare's Architect Admitted in 2012 That Only State Exchanges Get Subsidies

In a video discovered by the Competitive Enterprise Institute from January of 2012, one of the chief architects of Obamacare says the Affordable Care Act provides no tax credits for citizens in states that do not set up their own exchanges.

Speaking to an audience at Noblis, a nonprofit scientific and engineering research organization in Falls Church, Virginia, MIT economist Jonathan Gruber urged states to set up their own insurance exchanges so citizens could take advantage of the tax credits. An audience member commented, “It’s my understanding that if states don’t provide [exchanges], then the federal government will provide them for the states.” Gruber responded,

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—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 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. But, you know, once again the politics can get ugly around this. [emphasis added]

At the time, states were being pressured to set up their own exchanges instead of leaving the federal government to manage them.

Gruber's remarks at Noblis came five months before Halbig v. Burwell was filed. Halbig claimed exactly what Gruber is saying in the video: that Obamacare’s subsidies for private health insurance were limited to state-run health exchanges. Earlier this week, the D.C. Circuit Court agreed, striking down the Obama administration's implementation of the federal subsidies under an Internal Revenue Service rule. The IRS had expanded the meaning of  the “established by the state” language in the Affordable Care Act to include the federal exchanges after only a handful of states set up their own state-based exchange.

Jonathan Gruber, who helped design the Massachusetts law that was the model for Obamacare and was paid almost $400,000 to consult with the Obama administration on the new law, made no attempt to conceal his feelings about the new health care law in the 2012 speech. "I’m biased, I’m in favor of this type of law, I won’t hide that," Gruber told the Noblis audience. In the years after the passage of Obamacare, Gruber worked as a busy consultant on the issue, with several states hiring him for his expertise in the area of health insurance markets.

Gruber has since evolved on the issue of subsidies for federal exchanges.

In January 2013, he called the idea that Congress only intended the subsidies and tax credits to be available through state exchanges a “screwy interpretation” of Obamacare. In an interview with Mother Jones, Gruber huffed, “It’s nutty. It’s stupid…it’s essentially unprecedented in our democracy. This was law democratically enacted, challenged in the Supreme Court, and passed the test, and now [Republicans] are trying again. They’re desperate.”