Obamacare’s Little Red Pill

by Jonathan Keim

By now, you’ve probably had the opportunity to read about Jonathan Gruber, the economist and Obamacare architect who was caught on camera admitting: (1) that the Obamacare tax subsidies challenged in Halbig v. Burwell and King v. Burwell were intended to work pretty much the way the statute says; and (2) the structure of that provision was designed to put pressure on the states as part of the “ugly” political fight over Obamacare. Although Gruber has since changed his tune, those two propositions will come as nothing new to our faithful Bench Memos readers.

You’ve probably also read the running commentary on Halbig by left-wing journalists who say, well, nobody they talked to at the time said anything about yanking tax subsidies from recalcitrant states. The New Republic’s Jonathan Cohn, for instance, recently discovered that he himself explained to NPR back in 2010 that the Obamacare tax subsidies worked exactly the way the statute says. He still can’t quite convince himself that he was duped, saying, “I still think they are telling the truth. I still think it’s not a close call.”

It’s almost as if the media were transported to the Matrix and asked to choose between the red pill and blue pill – between truth and fiction – and they all chose the blue pill.

For every journalist in denial, though, there’s probably several people who took the red pill and are asking serious questions: Did the administration lie to us? Was the ACA all just a big mistake? How could this have happened? 

The definitive political history of Obamacare remains to be written, but here are a few thoughts.

First, I have no doubt that many non-political supporters of Obamacare sincerely believed what the administration’s surrogates and wonks were telling them. The administration would have wanted to keep the law’s highly political considerations out of public sight, safely tucked away from the policy discussion. Revealing the Chicago-style incentives behind the ACA’s mandates would have turned a debate about universal health care into a debate about freedom and individual liberty.

It’s worth remembering that the administration had no political reason to be candid about these highly coercive incentives and every political reason not to be candid. Journalists who styled themselves as policy experts committed malpractice by not digging deeper, especially analysts like Ezra Klein who at the time openly advocated ignoring the text of the bill. But by concealing the law’s coercive aspects, and with the assistance of a conveniently incurious news media, the administration breached faith with its own supporters.

Second, people who supported the fictional version of Obamacare should be hopping mad about being misled. The administration and congressional Democrats calculated that ramming through a broken Senate bill under cover of night would be better than passing anything with bipartisan support, even though the bill had massive policy problems that served “ugly” smashmouth politics. Rewriting the law later wasn’t a sign of good faith; it was a sign that the administration wanted more than anything else to avoid admitting the failure of its strategic deception.

Third, now that we have one of Obamacare’s architects describing the tax subsidy restrictions as “ugly” politics, the government can no longer plausibly claim in Halbig that Congress could never have intended to punish the states for failing to create exchanges. In fact, we now also know through a House committee report that the administration relied on similar hidden political considerations when it attempted to rewrite the tax-subsidy provision.

The government’s only remaining legal argument, that the statute is ambiguous, is a reach. Even the Fourth Circuit, which found ambiguity in the statute and ruled 3–0 against the plaintiffs, concluded that “the defendants have the stronger position, although only slightly.” Although I disagree with the Fourth Circuit’s conclusion on the merits, its comment should give Halbig critics pause about disparaging the D.C. Circuit opinion as “shamefully dishonest” or nothing more than the product of “kill-Obamacare judges.” If even the Fourth Circuit thinks the interpretation is a close call, the least that honest reporters can do is ignore the ideologues who are trying to get them to prejudge the case in the media.

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