This week a series of controversial videos emerged featuring the ‘architect of Obamacare,’ MIT economist Jonathan Gruber. In the so-called ‘sixth’ video, Gruber discusses Obamacare’s ‘Cadillac tax’ on high-cost insurance plans. CNN’s Jake Tapper explains.
While employers do not currently have to pay taxes on health insurance plans they provide employees, starting in 2018, companies that provide health insurance that costs more than $10,200 for an individual or $27,500 for a family will have to pay a 40 percent tax.
Until now, the Cadillac tax was generally believed to apply to only a very small percentage of plans, and this belief was reinforced by statements from the White House and various Obamacare supporters.
When the Cadillac tax was first rolled out, it was explained by Obamacare backers as a tax that would only impact those with “high end plans” — not all employer sponsored plans. A White House economic adviser in 2009 set “the record straight” by saying “the excise tax levied on insurance companies for high-premium plans, the so-called ‘Cadillac tax,’ will affect only a small portion of the very highest cost health plans — a total of 3% of premiums in 2013.”
In the sixth video, however, blabbermouth Gruber lets slip the secret that the Cadillac tax is intentionally designed to apply eventually to all plans, not just high-end plans, with the deliberate long-term goal of destroying all employee health benefits.
Obamacare’s designers essentially included in the law a slow-acting poison intended to, over a number of years, totally kill off employer sponsored insurance. The toxic formula was provided by the fact that the cut-off level of benefits for applying the tax was indexed to the slow-growing Consumer Price Index rather than to fast-growing health care costs. The plan, Gruber explains, was to defer the start of the tax until 2018.
“[B]y starting it late, we were able to tie the cap for Cadillac Tax to CPI, not medical inflation,” Gruber said…Gruber explains that by drafting the bill this way, they were able to pass something that would initially only impact some employer plans though it would eventually hit almost every employer plan…”What that means is the tax that starts out hitting only 8% of the insurance plans essentially amounts over the next 20 years [to] essentially getting rid of the [tax] exclusion for employer sponsored plans,” Gruber said.
But without the tax exemption there will remain little incentive for employers to offer health benefits. Employers can redirect their health spending to paying higher wages and salaries, but in that case households will be facing a massive tax increase. Their current health benefits are not taxed, but the extra income would be.
What’s really amazing is that we’re only finding out about all this nearly five years after Obamacare was enacted. An awful lot of middle-class soccer moms voted to reelect President Obama two years ago. How many of them might have thought twice about it if they had known that Obama had already passed a death sentence on their employee health benefits? But to Jonathan Gruber, who gloats about deception and lack of transparency, those voters are just suckers.
Gruber called the tax exemption “one of the worst public policies in America,” and insisted that “every economist should celebrate” its repeal.
Well, pardon us for not celebrating, because we take issue with how the legislation was enacted. Unlike Gruber, we don’t agree with imposing major social change on the people by surreptitiously inserting language into 2,000 page bills that nobody reads and that Congress approves without debate or deliberation. Such a legislative process leaves the citizenry entirely in the dark about what is being done to them and makes a mockery of the institutions of representative democracy.
If the political elites can impose a change as consequential as putting an end to employee health benefits without informing or consulting the people, then our whole system of democratic political institutions–voting, elections, staged debates, Congressional hearings, CBO reports, Sunday talk shows, town halls, etc.–amount to little more than an elaborate sham intended to hoodwink the people into believing they have a say in how they are governed. Gruber even boasted that, by the time the people figure out they’ve been swindled, it will be too late for them to do anything about it.
And by that time, those who object to the tax will be obligated to figure out how to come up with the money that repealing the tax will take from the treasury, or risk significantly adding to the national debt…Unions and employers who object in 2018, he noted, “at that point if they want to get rid of it they’re going to have to fill a trillion dollar hole in the deficit…It’s on the books now.”
What does it say about Jonathan Gruber’s political philosophy that he thinks people who object to the tax are “obligated” to fill the “hole in the deficit,” but he and others who imposed the tax in the first place were not obligated even to consult or to inform the people?
It’s as if Gruber sees politics in America as merely a private conversation among political elites and technocrats. And one of the gentlemanly rules of that private debate states that, if a gentleman opposes a tax, he is ‘obligated’ to explain how he proposes to ‘fill the hole in the deficit.’ Meanwhile, the people who have to pay those taxes are excluded from the conversation.
We appreciate Gruber’s candor, but this is political elitism worthy of a French aristocrat of the Ancien Régime, as if Louis XIV’s legendary finance minister, Jean-Baptiste Colbert, had been reincarnated as an MIT economist.
In contrast, here at Yet, Freedom! we remain committed to post-Enlightenment political ideals of openness and transparency. Even if Jean-Baptiste Gruber doesn’t.