Why does the press attack Gruber and ignore Pauly?

Who is Jonathan Gruber?

By Jose A. DelReal
The Washington Post, November 11, 2014

Jonathan Gruber is probably having a hell of a day.

The MIT economics professor, best known until now for his key role advising the Obama administration on the Affordable Care Act, has come under attack after year-old video of a University of Pennsylvania panel surfaced that featured him referring to the "stupidity of the American voter" and a “lack of transparency” as crucial to the passage of the 2010 health reform law.

Those comments have struck a nerve on the right, with some of the law’s critics pointing to Gruber’s comments as evidence that the administration intentionally deceived the American public on the costs of the program.


AHEC 2013 Conference

November 10, 2014

As part of the 24th Annual Health Economics Conference hosted by PennLDI, Mark Pauly and Jonathan Gruber were featured in the Plenary Panel discussing the role of economics in shaping (and possibly reshaping) the ACA.

Transcript from Video:

Jonathan Gruber (at 20:24):  Mark made a couple of comments that I do want to take issue with, one about transparency of financing and the other is about moving from community rating to risk-rated subsidies. It should… You can’t do it, politically - you just literally cannot do it. Okay, transparent financing… not just transparent financing… all transparent spending. I mean, this bill was written in a tortured  way to make sure that CBO did not score the mandate as taxes. If CBO scores the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk-rated subsidies, you get a law which said healthy people are going to pay in… you make it explicit the healthy people pay in and the sick people get money, it would not have passed. Just like… lack of transparency is a huge political advantage. And, basically, you know, call it the stupidity of the American voter, or whatever, but basically that was really critical to get the thing to pass, and, you know, it’s the second best argument. Look, I wish Mark was right, we could make it all transparent, but I’d rather have this law than not.

Mark Pauly (at 12:39):  My last comment is on most needed research, and here I’m going to ask you to cheer me up. So the premise, actually, for my thesis work, on why we ought to subsidize health insurance was this idea that we… what I would now call benevolent moral hazard. We want to create moral hazard to get people who underuse medical care by community standards, to use it because it will improve their health, and, at least I was terribly depressed by the results of the Oregon study where impacts on health were minimal and moral hazard, though, came through like gangbusters - it’s still about a 33 percent increase. One study doesn’t prove anything, and it was not super powered, although it was powered to detect large impacts if they’d been there. But I think we either need to figure out a more sensitive way to detect health influences, or the alternative, which some people have talked about is, say, well it really wasn’t health care we wanted, it was financial stability, which I’m willing to give $1.98 for. I guess my concern is there are so many ways a person can go broke, why would we particularly concentrate on subsidizing health insurance to prevent them from going broke that way?



By Don McCanne, MD

Quite a furor has been caused by Jonathan Gruber’s controversial comments at a conference last year - comments on the importance of preventing transparency over the transfer of funds from the healthy to the sick. Yet the press has remained silent on Mark Pauly’s disconcerting comments at the same conference. So what does this mean, and what does it have to do with single payer?

It is common for voters to express their opposition to taxes by stating that they do not want money to be taken away from them by the government and given to someone else. There is particular resentment, for instance, of middle-income workers paying taxes to provide food stamps for low-income individuals, or, worse, the objection of high-income individuals being required to participate in a transfer from the rich to the poor. Yet everyone agrees that we should have arrangements wherein our very high medical bills are paid by others. That is the very essence of health insurance - a transfer from the healthy to the sick. But now that health care costs are so high, a transfer from the wealthy to low- and middle-income individuals and families is also essential.

Gruber’s comment referred to the fact that voters who are not particularly sophisticated (“call it the stupidity of the American voter”) should not have the financing of the Affordable Care Act framed as a “taxes.” So the lack of transparency was in the rhetoric - avoiding the use of the term “taxes” - but not in the policy. The financing was to be perceived as insurance premiums with subsidies if required, though the rhetoric did not include the fact that the subsidies are a transfer through the tax system. So there is not dishonesty here. It is totally about political rhetoric, compounded perhaps by Gruber’s inelegant choice of words.

But look at what Mark Pauly has to say. He is considered by many to be the father of the theory of moral hazard in health insurance - obtaining free care because you are insured - care that you would not have obtained if you had to pay for it. Yet he supports creating what he calls “benevolent moral hazard” - getting people to use medical care when it benefits their health. He would do this by subsidizing insurance based on individual risk rather than based on community rating. People with greater needs would receive insurance subsidies if they could not afford the higher premiums. (Why this is a terrible idea requires a discussion of risk pools, administrative efficiency, equity, and other financing concepts which we will not go into here.)

But then Pauly goes on to lament the moral hazard of Medicaid by using the Oregon study. He indicates that health care use increased 33 percent without any demonstrable benefits. The Oregon natural experiment has been discussed thoroughly elsewhere, but, just briefly, we’ll say that the study was not powered to detect major beneficial endpoints, but, further, there are many other benefits of physician visits that are never measured in these studies (e.g., reassurance that distressing symptoms are benign). People do not go to physicians as a social outing, but rather they go because they have health concerns.

The really outrageous comment that should offend even the media is Pauly’s glib questioning of why we would “particularly concentrate on subsidizing health insurance” when “there are so many ways a person can go broke.”

The reason that we should be especially concerned about this truly insensitive comment is that it represents the thinking of one of the nation’s health policy leaders who are sending us down the path of “skin in the game” consumer-directed health care that deliberately places financial barriers in the way of beneficial health care.

And this is what the Gruber furor has to do with single payer. If the media investigated and reported on the really important issues, they would expand on Pauly’s comments to show us how single payer would REMOVE financial barriers to care - ensuring that everyone would have the health care that they need. Reporting insignificant rhetorical gotchas while ignoring an expert’s dismissal of going broke due to personal health care expenses reflects poorly on today’s media - not all of them, but far too many. Google both Gruber’s and Pauly’s comments and you’ll see which one was covered and which one wasn’t.