Hidden cross subsidies, planned obfuscation, and purposeful "overselling": business as usual or issues worthy of debate?

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Jonathan gruber's unwise and widely quoted comments about the “stupidity” of the American voter and the deliberate use of obfuscation to secure passage of the Affordable Care Act (ACA) should serve as an important lesson for those who have never been appointed to public policy positions, for the advisers of elected or appointed officials, and for those in elected or appointed positions: No meeting is ever “off the record.” Flippant comments can (and often do) come back to haunt you. But Gruber's comments also raise several issues that are worthy of more serious consideration. The specific portions of the law on which Gruber focused involved the use of tax law complexities to obscure the effects of placing a 40% excise tax on insurance companies rather than limiting how much of an employer's contribution to an employee's insurance premium could be excluded from the employee's taxes (the “Cadillac” tax). The law also used insurance regulations to mask some of the cross subsidies contained in the legislation, such as limiting variations in insurance premiums across different age groups to 3:1 when the actuarial value suggests a difference of 5:1.1 Minimizing fiscal transparency in proposed legislation is not limited to the Obama administration or the ACA. But it is particularly relevant here because of the unusual complexity of the legislation, the highly partisan nature of the legislation's passage, and the forced scramble to recover from portions of the legislation that oversold what would or would not result from its passage—such as the promises that “if you like your plan, you can keep your plan” and “if you like your doctor, you can keep your doctor.” It is Gruber's comment that such obfuscation was critical to the legislation's passage that raises the most troubling issues.2 If he is right—and I think at least some of that is debatable—it raises the question of whether “it's OK” to engage in obfuscation if it produces a “highly desired goal.” It also raises the questions of whether engaging in similar practices is part of the reason that the ACA remains so unpopular and, if so, whether legislation passed in this manner is sustainable.