Up until this point, most of the attention regarding the failure to disclose the connection between Jonathan Gruber and the White House has fallen on Gruber himself. Far more troubling, however, is the lack of disclosure on the part of the White House, the Senate, the DNC and other Democratic leaders who distributed Gruber's work and cited it as independent validation of their proposals, orchestrating the appearance of broad consensus when in fact it was all part of the same effort.
The White House is placing a giant collective bet on Gruber's "assumptions" to justify key portions of the Senate bill such as the "Cadillac tax," which they allowed people to believe was independent verification. Now that we know that Gruber's work was not that of an independent analyst but rather work performed as a contractor to the White House and paid for by taxpayers, and economists like Larry Mishel are raising serious questions about its validity, it should be made publicly available so others can judge its merits.
Gruber began negotiating a sole-source contract with the Department of Health and Human Services in February of 2009, for which he was ultimately paid $392,600. The contract called for Gruber to use his statistical model for evaluating alternatives "derived from the President's health reform proposal." It was not a research grant, but rather a consulting contract to advise the White House Office of Health Reform, headed by Obama's health care czar Nancy-Ann DeParle, to "develop proposals" for health care reform.
How did the feedback loop work? Well, take Gruber's appearance before the Senate HELP Committee on November 2, 2009, for which he used his microsimulation model to make calculations about small business insurance coverage. On the same day, Gruber released an analysis of the House health care bill, which he sent to Ezra Klein of the Washington Post. Ezra published an excerpt.
White House blogger Jesse Lee then promoted both Gruber's Senate testimony and Ezra Klein's article on the White House blog. "We thought it would all be a little more open and transparent if we went ahead and published what our focus will be for the day" he said, pointing to Gruber's "objective analysis." The "transparent" part apparently stopped when everyone got to Gruber's contractual relationship to the White House, which nobody in the three-hit triangle bothered to disclose.
But that was child's play compared to the effort that went into selling Gruber's analysis of the bill unveiled by the Senate on Wednesday, November 18. Two days later on Friday November 20, Gruber published a paper entitled "Impacts of the Senate High Cost Insurance Excise Tax on Wages: Updated," claiming that the excise tax would result in wage hikes of $234 billion from 2013 through 2019.
And it was off to the races.
The next day on the 21st, Ron Brownstein wrote in the Atlantic about Gruber's effusive praise for the cost-cutting measures in the bill: "Everything is in here....I can't think of anything I'd do that they are not doing in the bill. You couldn't have done better than they are doing," says Gruber.
On Monday the 23rd, the DNC was sending the Brownstein column around in its entirety...one of 71 emails they would send touting Gruber's work. It was also included in OFA's Monday Morning News Clips on BarackObama.com.
On Tuesday the 24th, OFA had another post touting the Brownstein article and citing Gruber as a "self-proclaimed skeptic on this stuff. The DNC sent that around, too. Mike Allen wrote that Obama had made the Brownstein article "mandatory reading" in the West Wing. TPM had the scoop that Rahm Emanuel told senior staffers "not to come back to the next day's meeting if they hadn't read the article."
David Brooks of the New York Times was not convinced that the Senate bill would be deficit neutral, so Peter Orszag pointed him to the Brownstein's "insightful article on health care costs" on the White House OMB blog that same day. It's hard to believe Orszag didn't know about Gruber's contract -- a search of the White House visitor logs indicates he met with Gruber on March 26, the day after his HHS contract was first awarded.
Paul Krugman cited Gruber's glowing analysis in the Brownstein article -- "this is the best effort anyone has made" -- as one of the reasons he supported the Senate bill, noting that "the health care economists I respect are seriously impressed by the cost-control measures." Rahm Emanuel subsequently cited Krugman and Brownstein to Jonathan Weisman of the Wall Street Journal as evidence of a "progressive backlash against the progressive backlash" to dismiss liberal criticism of the bill. Jeff Bingaman mentioned the Krugman piece on the floor of the Senate, and entered it into the Congressional Record.
Orszag seconded that notion, saying, "I agree with Jon Gruber that basically everything that has been put forward in health policy discussions for a decade is in this bill."
"And then some," added DeParle.
On November 27, following the release of the CBO score, Gruber issued another report saying the Senate bill would reduce non-group premiums (Gruber is one of the CBO's academic advisors). Again, Ezra Klein printed excerpts in his Washington Post blog, saying it was "good news for advocates of reform."
The next day on the 28th, Mike Allen ran it with the headline "MIT analysis backs Obama health plan," leading readers to believe that Gruber's work represented outside confirmation. The DNC didn't flinch at that description, sending around an email on the 29th with the subject line: "MIT Analysis backs Obama Health Plan," and another on the 30th saying "ICYMI" ("In Case You Missed It"), just to be sure you didn't. Tom Udall pointed to Gruber's report, in addition to Ezra and Politico, on his website.
Then HHS included the Politico article in their newsletter, saying "a memo authored by MIT economist Johnathan Gruber" finds the bill will lower non-group premiums. No mention that he was working for them.
On the 29th Nancy-Ann DeParle, head of the very White House Office of Health Reform that Gruber was hired to consult for, posted perhaps the most misleading column of all on the White House blog:
MIT Economist Confirms Senate Health Reform Bill Reduces Costs and Improves Coverage
She identified Gruber as an "MIT Economist who has been closely following the health insurance reform process" who had "issued a compelling new report." There was no acknowledgment that her very own White House office had commissioned Gruber's work.
On November 30th, Krugman wrote about the CBO report, relying on Gruber's analysis. He, too, concluded it was "good news for reform advocates." That same day, Harry Reid took to the floor of the Senate that same day, saying "just a few days ago an MIT economist -- one of the nation's foremost economists -- a man by the name of Jonathan Gruber, analyzed our bill and concluded it will help Americans pay less and get more."
Reid read from the piece on the floor of the Senate, saying that it provided substantiation from Gruber "who is one of the most respected economists in the world" that the Senate bill would reduce the deficit. Nancy Pelosi touted "the Gruber analysis" on the Speaker's website.
On December 3, Kathleen Sebelius released a statement on the "Benefits of Health Insurance Reform for Businesses." She substantiated claims made in the statement by citing Gruber's November 3 testimony before the HELP Committee, and his November 5 paper. No mention that he was a contractor to HHS.
And on December 12, John McCain referred to "an analysis by MIT economist John Gruber released by the White House this weekend."
Subsequent to that, a report was issued on December 14 from the Executive Office of the President by the Council of Economic Advisers. It again invoked Gruber's November 20 paper as the sole source for the claim that the excise tax would cause wages to increase: "Research by Jonathan Gruber finds that even just a single provision -- the excise tax -- would increase after-tax wages by $234 billion from 2013 to 2019," it says.
On December 28, Gruber published an Op-Ed in the Washington Post -- in which he neglected to mention his contract to consult with the White House on this very issue. He was asked point-blank if he had any contracts related to the piece for which he was being paid, and he said "no." The Post subsequently published a correction.
And just last week, John Kerry -- author of the Cadillac Tax provision of the Senate bill -- writing in The Hill cited Gruber's work alone as the authority for the claim that the excise tax would result in increased wages. Did Kerry, as author of that part of the Senate bill, work with Gruber to craft it too? He doesn't say.
Gruber validates the argument put forward by the Senate bill's proponent that it will make health care more affordable -- a claim that Marcy Wheeler has made compelling arguments against. Though Gruber's analysis has been cited as support that insurance would be affordable, it appears that the individual mandate will impose a financial burden on middle class families that will leave them with no ability to make the co-pays necessary to use the insurance they are forced to buy. But because Gruber's work has the authority of an expert from MIT, it has been accepted as independent confirmation that the bill will make things better, not worse.
Gruber is also cited repeatedly to substantiate the claim that the excise tax will result in higher wages after employers reduce benefits, because they'll pass those savings on to workers. That argument on its face flies in the face of all reason, and nobody has been able to point to a study showing that when health care costs go down, businesses mostly share those savings. Quite the contrary: In November, a Mercer survey of 465 employer health plan sponsors found that only 16% would pass on any savings to employees.
But Gruber's representations on that front are continually advanced as one of the primary reasons why Krugman and others support passage of the bill. As Marcy Wheeler observed, when Jason Fuhrman made that case on the White House blog, Gruber was the sole source supporting that particular claim. She noted with irony that the administration "can't muster any support among 3 hand-picked reports for its claim that the excise tax will lead to wage increases."
But her central point is critical: most claims that the excise tax will "bend the cost curve" inevitably lead back to Gruber's analysis.. And now that his ties to the White House have been exposed, he seems to be inserting caveats and backing away from that assertion.
What was Gruber's role in crafting the Senate bill? Nobody will say. Is he in effect grading his own work when he praises the bill? We don't know. What we do know is that the White House engaged an expert who was quite likely to reach the conclusions he reached, because he'd been making similar claims for years. And they worked hard to promote his work as independent validation of their plan, when in fact he was an integral part of it.
As much as we can do in groups like this to be transparent about modeling the process, I call my model a black box, but in fact I have now put together a spreadsheet which lays out every single one of the assumptions that is in the model, in a document which describes it all. I think we all need to be as transparent as possible in what is going into the models, so that ultimately folks like ASPE and CBO and others who need to use these to make policy can understand why we are getting different answers and what is going on.
Recently Bill Black, Eliot Spitzer and Frank Partnoy called for the release of AIG emails and internal documents, asserting that the public now owns 80% of the company and should be able to examine them in order to be able to ascertain what happened in the past. Likewise, now that it is known that Jonathan Gruber was a White House consultant, the assumptions that have been used by the White House to estimate the impact of the health care bill for decades to come should be made publicly available.
Both Congress and President Obama owe us that kind of transparency before committing to a path that could have serious consequences for the health and prosperity of all Americans.