You Saw It Here First: Obamacare Deliberately Subsidized Only State Exchanges

MIT's Jonathan Gruber and Friend

We earlier argued that the reason Obamacare by law provided subsidies only to people signing up on state exchanges--and not to those signing up on federal exchanges--was to encourage the states to operate the exchanges, in conjunction with the Medicaid bonuses the feds were at the same time providing the states to expand Medicaid coverage. For people lacking employer-based health insurance, Obamacare means either joining an exchange or signing up under expanded Medicaid coverage. So it made sense for states to handle both.

We suggested that after the Supreme Court in 2012 ruled the feds no longer could threaten states with cutting off all Medicaid coverage unless states expanded Medicaid as the feds wanted, states then lost interest both in expanding their Medicaid programs and in running the exchanges, leaving Obamacare’s operation entirely in the feds' hands--an unanticipated event when Democrats first created Obamacare.

We made our argument based upon logic, but without supporting evidence.

Now evidence is in that supports our position. Political guru Michael Barone has found that in 2012, Obamacare proponent and MIT health care expert Jonathan Gruber stated that “all or most states would create their own exchanges because they wouldn't get subsidies if they let the federal government run their exchanges.” As Barone added, “Gruber in 2012 evidently really believed that almost all states would set up their own exchanges because their residents would get more money than if the feds ran the exchange.”

Barone explained, as we had tried to explain,

That's how federal powers have increased over the years. Congress can't order states to adopt policies, but it can dangle money in front of them if they meet certain conditions. That's how we got the 21-year-old drinking age even though the 22nd Amendment recognizes states' powers to regulate alcohol. [It’s] how Medicaid, passed in 1965, worked, too. Forty-nine states signed on by 1972. Only Arizona held out until 1982.

Barone continued, along the lines we earlier argued,

Obamacare required states to expand Medicaid or lose all Medicaid funds. In June 2012, the Supreme Court ruled 7-2 that that violates the Constitution. Once they had a choice. . . 21 states . . . said no thanks to the extra funds, and three are debating the issue. Only 54% of Americans are receiving Medicaid programs Obamacare promised to give -- or impose on -- everyone. This is not what Obamacare boosters like Gruber . . . expected. They thought Obamacare money would be too tantalizing to resist. But for many or most states it wasn't.

States opted out of the Medicaid expansion. And they also let the feds set up their own Obamacare exchanges. That posed a problem for the feds they rectified--in my view--by illegally allowing the fed-run exchanges to pay out subsidies originally intended only for state exchange use.

We’ll see, someday, whether or not the Supreme Court agrees with Barone (and me).