Re: Jonathan Gruber

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First of all, I’d like to echo and associate myself with everything that Kate has to say below, and to congratulate Marcy Wheeler on an excellent piece of reporting. As has been so often the case with Marcy, she distinguishes herself by asking questions and doing spade work that at times makes the rest of us look a little thick by comparison.

Count me among those who have quoted Jon Gruber often in the past–and among those who will continue to, although in the future, not without disclosing his financial ties. (Not having done so, by the way, is a failure of jounalists, not any fault of Gruber, who as best I can tell, never did anything to hide those ties.) Here’s why I will continue to rely upon him as a source:

His data and his microsimulation model–15,000 lines of computer code–are, quite simply, the gold standard in health care policy. That’s why politicians of both parties have turned to him for assistance. In 2007, when I was working on this story, Mitt Romney recalled for me the “aha moment” of health reform in Massachusetts. It came right out of Gruber’s data:

Yet they also found something surprising when Romney began looking at who, precisely, the uninsured were in Massachusetts. Everyone expected the typical profile to be that of a single mother just scraping by or maybe someone with chronic illness–not exactly ideal customers for insurers. Instead, nearly the opposite was true. “It turned out they were largely single males, and they were working,” Romney recalls. “They were eminently insurable. It’s funny how data opens up new insight.”

That was the bit of analysis that changed everything. Gruber ran the numbers at MIT: universal coverage would be expensive, but so would any half-measure. Romney could simply expand the existing system and, by doing so, cover about one-third more people. Or he could cover everyone by including an “individual mandate,” a controversial measure requiring people to buy insurance and offering subsidies to those who couldn’t afford it. The price tag would be about one-third higher. “I began by saying, Well, maybe we could help half the people that don’t have insurance, maybe we could help a third of the people, and ultimately it became, You know what? We could actually get everybody insured!” Romney recalls.

And Massachusetts was not the only state that turned to Gruber. He also worked with Arnold Schwarzenegger in California, and with state officials in Delaware, Connecticut and Maryland as they have attempted to expand coverage. During the 2008 presidential campaign, most of the Democratic candidates turned to him at one point or another. At one point, for instance, John Edwards had him debate the merits of various alternatives with Zeke Emanuel.

But what he had to say wasn’t always what politicians wanted to hear. For instance, he has long been a critic of the tax exclusion for health benefits, which is why he would tell reporters during the general election campaign that his preference would be a plan that combined Obama’s coverage with John McCain’s financing. And that is why he is such a fan of the “Cadillac tax.”

Gruber, a one-time student of Larry Summers at Harvard, developed his model when he returned to academia from a stint working for the Clinton Administration. He told me once that this endeavor had been the idea of Clinton’s health care adviser Chris Jennings. “What people in Washington need,” Gruber recalled Jennings telling him, “is someone who is objective and willing to give them answers, not ‘on the one hand, on the other hand.'” As Gruber explained to me: “The fact that I was an academic willing to do this put me in a unique position.”

I first became aware of how much the Obama Administration had come to rely on him early last year, when a top White House official marveled to me that they could get answers from Gruber and his staff of three overnight. By comparison, this official told me, it would take weeks to run the same question through the Office of Management and Budget or the Congressional Budget Office. Of course, somewhere in the back of my mind, I assumed that Gruber was getting paid for this. What I kick myself for now is that I didn’t ask the obvious: How much?

Another thing worth pointing out is that Gruber’s public statements have not always been exactly what the Obama White House wants to hear. For instance, there’s this from Politico:

Gruber, the favorite economist of the White House, said the bill “really doesn’t bend the cost curve.”

“But I think this bill starts us down the road to the point where we can do that,” Gruber said. “The alternative is doing nothing. Relative to doing nothing, I think we are a lot closer to bending the curve.”

Reminded that Obama demanded a bill that lowers health care spending, Gruber said: “That is what he would like to do. But he’s not doing it.”

And at a particularly delicate moment, he told me this about the Senate Finance Committee bill:

Where the original version of the bill would have allowed people to opt out of the so-called individual mandate if the cost of coverage exceeded 10% of their income, the latest version lowers that threshold to 8%. Jonathan Gruber, a health economist at the Massachusetts Institute of Technology, estimates that will mean 3 million fewer people will buy health insurance. “That’s bad,” he says, “but I don’t think it’s catastrophic.”

More problematic, he says, is the fact that the new version of the bill would impose lower fines than the original draft on those who are not exempt from the mandate but who choose not to buy insurance anyway; indeed, the CBO estimates that the penalties will now bring in about $4 billion over 10 years, down from an original projection of $20 billion. That reduction in fines, Gruber says, is like saying “we think taxes are too high, so we’re going to encourage you to cheat.” The result, he fears, is that the new insurance marketplaces created under the legislation will be crowded with sick people, who are expensive to insure, while relatively inexpensive healthy people stay away. And that, Gruber warns, would probably result in higher premiums for everyone.

These kinds of comments that convince me that, wherever he is getting his paycheck, Gruber has not lost his objectivity.

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