Gruber on Romney and Obama
By David Henderson
I found this 33-minute PBS interview of Jonathan Gruber, one of the architects of both Romneycare in Massachusetts and Obamacare for the United States, interesting.
I’ve posted about Gruber earlier in these 14 posts.
The interviewer is lobbing softballs throughout, which isn’t necessarily a bad way of extracting information. It works in bringing out Jonathan’s views about the issues and about Romney and Obama. Sometimes I like those interviews because too much “gotcha” can fail to bring out interesting things. It was extreme, though, in that the interviewer didn’t at all mention some of the amazing things Gruber was caught saying on tape. The interviewer also didn’t ask any tough questions about Obamacare.
Parenthetically, I know I shouldn’t say this, because you’re supposed to hate people you disagree with, but I found the Jonathan in this interview a sincere passionate man: for all his talk about tricking the voters, here’s someone who thought things through (within a very limited framework–see my reference to his graphic novel below) and followed up by actually acting on what he thought. This was the man I sat beside and testified with in 1994 when we were on opposite sides of Hillarycare.
26:30: In discussing the tax exclusion for employers’ expenditures on employees’ health insurance–health insurance paid for by the employer is not taxed as employee income whereas wages and salaries are taxed–Jonathan says, “It’s regressive: the richer you are, the bigger tax break you get.” That doesn’t make is regressive. For a tax to be regressive, it has to be the case that the higher-income you are (what Jonathan meant by “richer”), the bigger the break you get as a percent of income. But since the employer’s contribution to the employee’s health insurance is a much higher percent of income for the low-income person than for the high-income person, the exclusion is progressive, not regressive. Here’s what a Commonwealth Fund study found in 2009:
Claims that the current tax treatment of health insurance benefits is regressive are typically based on changes in absolute tax dollars rather than changes in tax rates. In economics, tax increases are defined as “progressive” if they represent a greater share of income for higher-income households. Defined as a share of income, the value of the current tax exemp- tion is larger for low- and middle-income households with employer-provided coverage than for high- income households. Elimination of the exemption would thus introduce a much greater increase in fed- eral tax liability for households with incomes below $50,000 than for those with incomes above $200,000, and increase the tax rate of lower-income households with employer coverage more than those higher- income households. Therefore, a cap on the tax exemption of health benefits would represent a regres- sive–not progressive–change in tax policy.
27:20: “There is not one single health expert in America, who, if setting up a system from scratch, would have this employer subsidy in place.” It’s mainly an employee subsidy–if you can call the untaxing of something a subsidy, and, in some respects you can–but his point remains.
Gruber talks throughout about how he was highly impressed both with Romney while working on Romneycare and with Obama while working on Obamacare.
28:35: “If you really want to see publicly how Obama works, the key thing to do is watch that Blair House meeting.” Gruber concludes that he’s “a smart guy.” I think that’s true. I haven’t watched the whole 6 hours, but I watched a couple of them at the time. Gruber is referring to to the February 26, 2010 6-hour Blair House meeting with Congressional representatives from both major parties.
But I never think of that meeting without thinking about one Obama statement that had me gasping about Obama’s lack of understanding of one basic aspect of insurance. It was this segment at 1:40:02 of the morning session:
When I was young, just got out of college, I had to buy auto insurance. I had a beat-up old car. And I won’t name the name of the insurance company, but there was a company — let’s call it Acme Insurance in Illinois. And I was paying my premiums every month. After about six months I got rear-ended and I called up Acme and said, I’d like to see if I can get my car repaired, and they laughed at me over the phone because really this was set up not to actually provide insurance; what it was set up was to meet the legal requirements. But it really wasn’t serious insurance.
It was serious insurance, but it didn’t insure everything. If he wanted collision insurance, he needed to buy it. I’d bet dollars to doughnuts that what he bought was the minimal liability coverage to handle the externality from the accidents he might cause.
I remember thinking, “Of course Obama could make that mistake as a young person, but he doesn’t seem to have figured out yet that it was a mistake in his own thinking about insurance rather than simply a feature of his insurance policy.”
So maybe at other points in the day Obama was impressive, but this one really made me wonder if he gets insurance. Some of the actual features of Obamacare don’t cause me to wonder less. Specifically, Obamacare requires the insurance company to cover, with zero copayments, certain procedures. This would have been like making him, as a young man, buy collision insurance for a “beat-up old car.”
32:20 “It is so unfortunate, the misunderstanding of this law. I’ve actually written a comic book, a graphic novel, to try to explain the health care law.”
Yes, and it was awful. To see why, read my co-blogger Bryan Caplan’s analysis, which I would rank in his top 20 of the thousands of posts he has written.