Joey Meyer

At Tuesday’s House Oversight Committee hearing on the Affordable Care Act, Republicans pressed MIT economist Jonathan Gruber on a statement of his that they claim supports the plaintiffs’ argument in King v. Burwell that the ACA was designed to withhold tax credits from people in states where the federal government operates the insurance Exchange.

Before even looking at that statement, the first point to make is that Gruber’s remarks are immaterial to the King case.  Statutory interpretation obviously begins with the words of the statute, and reading the law in its entirety shows that the ACA makes tax credits available to all Americans who need them, regardless of whether their states set up Exchanges.  If the Justices want to look beyond the statute’s text to help them understand its meaning, then the only relevant perspectives are those of the Members of Congress who helped draft and pass the law, and those of the state legislators tasked with implementing it—and members of both groups are on the record making clear that they always understood the law to make subsidies available on both types of Exchange. 

While Gruber provided economic modeling for the Obama Administration, he was not involved in policy or legislative discussions.  But to the extent that anyone may still think that Gruber’s perspective on the availability of tax credits is relevant, Gruber made clear in his testimony Tuesday that the models he ran were informed by the assumption that the tax credits would, in fact, be available in every state:  “Indeed, my microsimulation model for the ACA expressly modeled for the citizens of all states to be eligible for tax credits, whether served directly by a state exchange or by a federal exchange.”

The second point to make is that Gruber’s remarks didn’t actually support the plaintiffs’ argument in King.  Indeed, Gruber made very clear in his testimony that the quote “that has received so much attention lately omits a critical component of the context.”  Just as they have done with the health care law itself, opponents of the ACA have picked one piece of the quote that seems superficially to make their case, but ignore the context that in fact makes the opposite clear. 

Take a look at the quote for yourself.  At a panel event in 2012, Jonathan Gruber was asked whether or not the federal government would set up an Exchange if a state failed to do so.  Here’s his response:

Yes, so these health insurance exchanges . . . will be these new shopping places and they’ll be the place that people go to get their subsidies for health insurance. In the law it says if the states don’t provide them the federal backstop will. The federal government has been sort of slow in putting up its backstop, I think, partly because I think they want to sort of squeeze the states to do it.  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—but your citizens still pay the taxes that support this bill.

Opponents of the ACA isolate Gruber’s remark that “if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.”  But this ignores the surrounding sentences, which clarify his meaning.  Gruber had just stated that the Exchanges will “be the place that people go to get their subsidies,” and that “[i]n the law it says if the states don’t provide them the federal backstop will.”  So the federal backstops will provide subsidies, or tax credits.

As he has stated previously and as he reiterated clearly in his testimony Tuesday, these comments were made when it was uncertain whether the federal government would set up these “backstops” (the federal Exchanges) by the January 2014 deadline.  This is why Gruber prefaced his statement by noting that “the government has been sort of slow in putting up its backstop.”  He had also just expressed concerns that if Republicans won the White House later that year, they might drag their feet in implementing the federal backstops as part of an effort to “essentially kill [the ACA] from the inside.”  So when Gruber went on to say that citizens in states that don’t establish an Exchange might not get their tax credit, he meant that those citizens won’t get their tax credit if the federal government hasn’t put up its backstop yet.  Fortunately for the millions of Americans who have already used them, the government backstops are up, so eligible people in all 50 states can receive tax credits.

Gruber made all of this clear in his own words at the hearing on Tuesday: 

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 exchanges.  I have a long-standing and well-documented belief that health care reform legislation in general, and the ACA in particular, must include mechanisms for residents in all states to obtain tax credits.               

Gruber has offered this explanation before, and it has also been independently deduced by multiple conservative sources.  This interpretation is also clear from Gruber’s other statements.  Just a month before he made the 2012 comment, Gruber signed a report from the National Academy of Social Insurance that said in no uncertain terms that “individuals enrolling through a Federally-facilitated or Partnership Exchange have access to advanced payments of premium tax credits.”  He also signed his name to a brief supporting the government’s position on this question in a lower court.

Unfortunately, it’s not surprising that the enemies of the ACA have focused on one line in isolation, ignoring the context that makes its real meaning clear and refusing to look at other, relevant evidence that points in the other direction.  Indeed, such dishonest acontextualism is the basis of the whole King lawsuit.  The real story here is that the ubiquity of the Gruber quote—in Supreme Court briefs, congressional hearings, op-eds, and Fox News airtime—only betrays how weak the case against the ACA’s tax credit program really is.