Five Reasons Why Gruber Deserved Three Pinocchios

Last Friday, Washington Post fact-checked Jonathan Gruber’s congressional testimony about Obamacare subsidies. After looking at the evidence the Post awarded his explanation two Pinocchios. That’s not a bad outcome given the facts; however, the Post missed something which really should have bumped their rating from 2 to 3 Pinocchios.

The Supreme Court is reviewing Obamacare subsidies. In very brief strokes, plaintiffs in the case have argued that the language of the law only allows subsidies to be given to people who buy insurance on a state-based exchange — meaning people buying health insurance on the federal exchange would not be eligible for subsidies and would be forced to pay the actual cost. Critics of the lawsuit claim the language was merely the result of sloppy drafting and that the Obama administration should be able to re-interpret the language in a way which makes subsidies available to everyone. They argue that no one involved in writing the law ever intended for subsidies to be limited to state-based exchanges.

And that’s where MIT economist Jonathan Gruber comes in. He was a contractor that helped Democrats craft the bill and was often referred to as an architect of Obamacare. Gruber said earlier that the plaintiffs claims about the law were wrong. In fact, he called their idea “crazy.” And then in July of this year, recordings of two speeches Gruber had made in early 2012 became topics of national discussion. In both speeches, Gruber specifically says that states which don’t set up an exchange won’t get subsidies, i.e. exactly what plaintiffs have been saying. Since then, parties to the government side of the lawsuits have stopped citing Gruber as an expert.

Earlier this month the House Oversight Committee asked him to testify about those comments (and others he had made about how the law was designed to fool “stupid” American voters). In his Congressional testimony, Gruber said: “The point I believe I was making was about the possibility that the federal government, for whatever reason, might not create a federal exchange. If that were to occur, and only in that context, then the only way that states could guarantee that their citizens would receive tax credits would be to set up their own exchange.”

The Post’s Fact-Check

To its credit, the Washington Post decided to have one of its fact-checkers look at Gruber’s claim. Author Michelle Ye He Lee, in an honest effort, gave Gruber two Pinocchios for his explanation. On the Post’s scale that’s equivalent to “a false, misleading impression.” However it falls short of “Significant factual error and/or obvious contradiction” which is the standard for three Pinocchios. I believe the Post made a mistake because they overlooked one aspect of his comments in 2012, one I first pointed out here. Let’s walk through the Post’s conclusion:

Gruber watched his words carefully at the hearing, prefacing many of his statements with “I believe.” His written testimony presumably was approved by his attorneys, and is something that can’t be explained as a “speak-o” — Gruber’s term for a verbal typo. But we’re confounded by the wording in his prepared testimony that “the federal government, for whatever reason, might not create a federal exchange.” It is not consistent with statements he made in 2012.

The Post identified an obvious contradiction between Gruber’s current claims and his statements in 2012. He claims he was thinking the feds might not set up an exchange — but that’s impossible, since doing so is a requirement written into the law. The feds had no choice but to create an exchange. It’s not remotely believable that Gruber, an acknowledged expert on the law, was unaware of this at the time.

But here is where the Post lets Gruber slide. In his opening statement before Congress, he clearly said the feds “might not create a federal exchange,” which is nonsense. But during his testimony, he suggests that what he was really worried about was that the federal exchange might not be ready on time. It’s the claim that he was thinking the exchange might be late which the Post accepts as a reason to give him two Pinocchios rather than three.

In one of his extemporaneous explanations, Gruber said he was “reflecting uncertainty about the implementation of a federal exchange by January 1, 2014.” This makes sense in the context of what he originally said in 2012.

Five Reasons for Three Pinocchios

The Post’s analysis does not make sense in the context of Gruber’s 2012 statements. Here are five reasons why.

First, in his Jan. 10, 2012 statement, Gruber said absolutely nothing during his entire 50-minute speech about the federal exchange. He expressed no worry that it might not be ready in time. Remember, the context of his remarks was ongoing threats to the law’s success. He listed three, with the state’s as the third. But why not four threats, with the federal failure (or delay) as number four?  Why would he leave out something he now says was weighing on his mind?

Second, even if Gruber didn’t list failure of federal implementation as a threat by itself, he should have mentioned it as a qualifier to the threat presented by the failure of the states. In making his list of 3 threats to the success of the ACA, Gruber was careful to qualify each of them. For instance, when he discussed the 2012 election (threat #2) he pointed out that the law would be very hard to repeal unless Republicans had won the White House and 55 Senate seats (which didn’t happen in 2012). But Gruber did not similarly qualify threat #3, i.e. states setting up exchanges. He could have pointed out that the feds would eventually ride to the rescue. Apparently, this critical caveat never occurred to him.

Third, Gruber now says he was worried the feds might not get their act together. But back in 2012 he mentioned the timeline crunch that existed for the states to get their exchanges created. He said they were going to have a “crazy year” in 2013 trying to get ready on time. And yet, despite the time crunch, he says the states can get it done in time. Why couldn’t the feds do the same? Was there a reason to think states could pull it together but the feds could not? Gruber doesn’t offer any reason then — or now — to think so.

Fourth, and this is the real fatal flaw with Gruber’s excuse, he envisioned a specific way voters could get around the problem of not getting subsidies: an election. In his Jan. 10, 2012 Gruber said “when the voters in states see that by not setting up an exchange the politicians of the state are costing state residents hundreds and millions and billions of dollars that they’ll eventually throw the guys out.” Gruber now claims he was worried the federal exchange wouldn’t be ready “by January 1, 2014.” So the first election where voters could fix the problem would have been the one in November 2014, 11 months later. Did Gruber really think the federal exchange wouldn’t be ready, even by then? Remember, he thought the states could pull it together by the end of 2013, but we’re supposed to believe he had no faith in the feds even if they had an additional year.

Fifth, if Gruber was only worried about a delay at the federal level, why is he saying voters will need to throw politicians out at all? His statement about an election is not premised on the idea of a temporary delay which the feds will eventually rectify, but on a denial of subsidies which only voters can correct at the polls. Simply put, if Gruber had believed the federal backstop was coming then that was the solution to the problem, not an election.

To sum all this up, Gruber’s claim that he was concerned the federal government might not set up an exchange makes no sense. The exchange was required by law and he knew it. But there is also no way to mesh Gruber’s claim about a possible delay in federal implementation with what he said on January 10, 2012. Gruber never mentioned the federal exchange, not as a threat in and of itself and not as a qualifier to the threat of state’s not setting up their exchanges. He said he thought the states could get their act together in the time left to them, so why not the feds? Finally, what Gruber did mention as a solution to the problem of people not getting subsidies was an election to replace state leaders. That clearly puts the onus on voters at the state level. And if Gruber was only concerned about a delay, why mention an election which wouldn’t take place for another 11 months past the deadline he was supposedly concerned about?

The fact that Gruber couldn’t explain it in nearly four hours of congressional testimony and won’t even try to explain it to the Post now ought to make clear just how poor an explanation it is. The Post deserves credit for making an honest attempt to fact-check Gruber, but by their own published standard Gruber deserved at least three Pinocchios for the irreconcilable excuse he offered Congress.