“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes,” Gruber says in the video. “If CBO [Congressional Budget Office] scored the mandate as taxes, the bill dies. Okay, so it’s written to do that… 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, really critical to get the thing to pass.”
The next time I see him is summer 2009. The big issue there is that he really wants to make sure I’m moving forward on cost control. I think that at this point he sort of knew we had a good plan on coverage, but he was worried on cost control. So we had a meeting in the Oval Office with several experts, including myself, on what can we do to get credible savings on cost control that the Congressional Budget Office would recognize and score as savings in this law.
And that was a meeting — it was very exciting, once again, because the economists in the room all said the number one thing you need to do is you need to take on the tax subsidy to employer-sponsored insurance. We need one minute of background on this. The way employer-sponsored insurance works is, if you get paid in wages, you get taxed. If you get paid in health insurance, you do not. …
So this tax subsidy economists have been railing against for decades, it’s super-expensive. We forego about $250 billion per year in tax revenues. It’s regressive — the richer you are, the bigger tax break you get. And it’s inefficient because it causes people to buy excessive health insurance. So everyone in the room said, “You want something that is real cost control that we know it will work, go after this.”
Now, the problem is, it’s a political nightmare, … and people say, “No, you can’t tax my benefits.” So what we did a lot in that room was talk about, well, how could we make this work? And Obama was like, “Well, you know” — I mean, he is really a realistic guy. He is like, “Look, I can’t just do this.” He said: “It is just not going to happen politically. The bill will not pass. How do we manage to get there through phases and other things?” And we talked about it. And he was just very interested in that topic.
Once again, that ultimately became the genesis of what is called the Cadillac tax in the health care bill, which I think is one of the most important and bravest parts of the health care law and doesn’t get nearly enough credit. I mean, this is the first time after years and years of urging — and the entire health policy, there was not one single health expert in America who is setting up a system from scratch, would have this employer subsidy in place. Not one.
So after years and years of us wanting to get rid of this, to finally go after it was just such a huge victory for health policy. And I’m just incredibly proud that he and the others who supported this law were willing to do it. …