In 2009, during the height of the debate over Obamacare, the law’s architect, MIT economist Jonathan Gruber, was all over the op-ed pages, talking about how the bill would reduce the cost of health insurance. “What we know for sure,” he told Ezra Klein, “is that [the bill] will lower the cost of buying non-group health insurance.” His words were trumpeted by the law’s advocates, and were critical to persuading skittish Democrats to vote for the bill.
But “for sure” isn’t so sure as you might think:
As states began the process of considering whether or not to set up the insurance exchanges mandated by the new health law, several retained Gruber as a consultant. In at least three cases . . . Gruber reported that premiums in the individual market would increase, not decrease, as a result of Obamacare.
In Wisconsin, Gruber reported that people purchasing insurance for themselves on the individual market would see, on average, premium increases of 30 percent by 2016, relative to what would have happened in the absence of Obamacare. In Minnesota, the law would increase premiums by 29 percent over the same period. Colorado was the least worst off, with premiums under the law rising by only 19 percent.
The problem (or a problem anyway) with Gruber’s original model is it didn’t account for guaranteed-issue (you can’t turn anyone away) and community rating (you can’t charge expensive customers (enough) more). Which is to say, it didn’t account for either of the central features of Obamacare!
So why did anyone take it seriously in the first place? Because they wanted to believe.