After Grubergate controversy fades, legal challenge to Obamacare remains


By Eric Boehm |

Jonathan Gruber, the MIT economist and one-time architect of the Affordable Care Act, has been in the news a lot over the past two weeks.

A series of videos have revealed Gruber making frank and apologetic remarks about the legislative and political maneuvers used by the Obama administration — apparently as his suggestion or at least with him along for the ride — during the run-up to the passage of the ACA in 2010. It’s newsworthy because Gruber’s comments about the “stupidity of the American voter” expose one of the great truths about politics: it’s fine to lie to the people, but it’s never okay to admit to having lied to them.

This scandal will, like so many before it, soon fade from the headlines.

While public attention is fleeting, many issues raised by the Gruber videos will soon be sitting before the most important legal minds of the country.

In the midst of the Grubergate controversy, the U.S. Supreme Court agreed earlier this month to examine a legal challenge to Obamacare that hinges on the idea governments cannot say one thing in writing, then do something else.

The case, King v. Burwell, challenges the Internal Revenue Service’s interpretation of a section of the ACA relating to insurance subsides given to individuals who used the federal health care exchange website.

A strict reading of the text of the law says subsidies can only be awarded via state-run exchanges.

Congress could not constitutionally order states to run exchanges,” Sam Kazman, an attorney with the Competitive Enterprise Institute, told Watchdog Radio last week. “So they took the route of deciding to try to, in a sense, bribe states to do that by offering them subsidies if they did it. On the other hand, subsidies were not to be offered on the federal exchange.

KAZMAN: Sam Kazman, an attorney with the Competitive Enterprise Institute, says government can’t write one thing and then do something else.

After a majority of states decided against setting up their own exchanges, the IRS began doling out subsidies through the federal exchange, too.

When it comes to Obsmacare, saying one thing and doing another, it seems, is not exclusive to Gruber.

The CEI released a report Thursday detailing the extent of government flip-flops on Obamacare.

According to that report, citing a congressional investigation from earlier this year, both the IRS and Department of Health and Human Services initially developed rules to allow subsidies on state-based exchanges only.

Other documents show that HHS, during the initial development of the website, did not plan to offer tax credits on the federal exchange.

Somewhere along the way, both the IRS and HHS switched gears and decided to allow subsides through the federal exchange, which most Americans ended up having to use after 37 states declined to set up their own exchanges.

“It’s the job of agencies to carry out the law, not to rewrite the law,” said Kazman. “It is our view that when the IRS said ‘subsidies for everyone’ they were rewriting the law.”

All of which leads us back to — yep, you guessed it — Jonathan Gruber.

Without Gruber, it’s possible no one would have noticed the change in policy.

But during a 2012 presentation, Gruber was directly asked if there was a difference between the state and federal exchanges. His response?

“I think 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,” Gruber said, according to video of the event. He went on to say offering subsidies through the state exchanges only was an important piece of the legislation, meant to entice states into setting up their own exchanges.

His comments belittling voters and state lawmakers might make a bigger media splash, but those remarks might be the ones remembered for posterity.

Already, his comments have been used by the plaintiffs in the King and Halbig cases. They are surely going to come up again when the Supreme Court hears the cases, likely in March.

Gruber’s words do not definitely prove congressional intent — the government has to convince the courts that Congress intended to allow subsidies through the federal exchanges, even if they didn’t say so in the text of the law — but they do give a glimpse at it, considering his role in crafting the legislation.

The ACA survived its first major challenge in front of the Supreme Court in 2012, when a majority of the justices held that the individual mandate wasn’t unconstitutional.

If the court agrees with Kazman and his allies on King v. Burwell, it wouldn’t overturn Obamacare, but it would seriously damage one of the most important elements of the law.

As impolitic as Gruber’s more recent comments might be, it’s actually something he said more than two years ago that might end up derailing the health care reform law he helped write.