As Jonathan Gruber knows, the health-care law is a tax machine. The ‘Cadillac’ levy will hit the middle class.
Jonathan Gruber, a Massachusetts Institute of Technology economist, is making himself a household name, and not in a good way. A series of videos have emerged in recent days showing Mr. Gruber—an architect of the Affordable Care Act—telling college audiences that major parts of the law were designed purposely to mask its true cost to individual Americans.
As Mr. Gruber put it, speaking last year at a conference at the University of Pennsylvania: “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 getting the thing to pass.”
One example cited by Mr. Gruber is the so-called Cadillac tax, as the ObamaCare excise tax on high-value employer health plans is known. The tax, which he helped devise and will take effect in 2018, imposes a 40% levy on individual health plans worth more than $10,200, and on family plans worth more than $27,500. As Mr. Gruber’s remarks were unearthed last week, economist Mark Wilson and I released a study of the excise tax that shows he is right about its deceptive design. The tax is likely to hit many people who don’t have high-end coverage.
Mr. Gruber says in one video that his real aim was to reduce the tax break available to those who get employer-sponsored insurance, about 170 million Americans. He lamented that it would be hard to persuade Congress to reduce people’s tax breaks: “You just can’t get through. It’s politically impossible.” True enough—the excise tax does the job instead. It is a stealthy way to reduce the tax preference for health care without taking it away from employers.