M.I.T. economist Jonathan Gruber, whom his colleagues in the profession hold in very high esteem for his prowess in economic analysis, recently appeared before the House Committee on Oversight and Government Reform. Gruber was called to explain several caustic remarks he had offered on tortured language and provisions in the Affordable Care Act (the ACA) that allegedly were designed to fool American voters into accepting the ACA.
Many of these linguistic contortions, however, were designed not so much to fool voters, but to force the Congressional Budget Office into scoring taxes as something else. But Gruber did call the American public “stupid” enough to be misled by such linguistic tricks and by other measures in the ACA — for example, taxing health insurers knowing full well that insurers would pass the tax on to the insured.
During the hearing, Gruber apologized profusely and on multiple occasions for his remarks. Although at least some economists apparently see no warrant for such an apology, I believe it was appropriate, as in hindsight Gruber does as well. “Stupid” is entirely the wrong word in this context; Gruber should have said “ignorant” instead.Continue reading…
In the giddy days after the passage of ACA, I was chatting to a PhD student in health economics. He was in love with the ACA. He kept repeating that it would reduce costs, increase quality and increase access. Nothing original. You know the sort of stuff you heard at keynotes of medical meetings; ‘Healthcare post Obamacare’ or ‘Radiology in the new era.’ Talks warning us that we were exiting the Cretaceous period.
He spoke about variation in healthcare, six sigma, fee-for-value and ‘paying doctors to do the right thing.’
‘How?’ I asked.
‘I just told you, we need to pay doctors for value and outcomes.’ He smugly replied.
‘How?’ I asked again.
He did not answer. Instead he gave me the look that one gives an utter imbecile who doesn’t know the difference between a polygon and a triangle.Continue reading…
I think it’s fair to say Jonathan Gruber will not be offered the role of Pinocchio. Although intelligence agencies, in search of the truth serum, might have an interest in the ingredients of what he drinks.
Please put away the pitchforks. Gruber deserves credit for honesty and bipartisanship. Plus a complete rejection of Disneyland economics. If you’re looking for transparency, the other face of honesty, Gruber is ground zero.
‘Stupidity’, though, was an unfortunate choice of noun. And inaccurate. Gruber should have said ‘rational ignorance’ or ‘boundless optimism in technocracy,’ which describes most voters in any democracy.
‘Rational ignorance’ sounds smart. The cognoscenti know what you’re trying to get at. And the rationally ignorant, well they’re rationally ignorant. The term means something we do all the time: that is we can’t be bothered to seek information whether something is factually correct or not. It’s an information heuristic (mental short cut).
Imagine the information overload if we were presented itemized bills for everything we consumed in a restaurant. We’d know the costs of transporting that fine rack of lamb to the city, of its slaughter, of cleaning the abattoir after the slaughter. But to what avail is this information?
Unless you’re a payer hunting for pseudofraud, granularity is a nuisance. So that to avoid long term anhedonia from figuring CBO’s myriad calculations from magical Keynesian models we watch the Kardashians instead.
When you’re rationally ignorant you can be duped. Or rationally duped. But here is the key point: we choose what we allow ourselves to be duped about. No one can fool us twice without our consent.
“Then you should say what you mean,” the March Hare went on.
“I do,” Alice hastily replied; “at least–at least I mean what I say–that’s the same thing, you know.”
“Not the same thing a bit!” said the Hatter. “You might just as well say that “I see what I eat” is the same thing as “I eat what I see”!”
Alice in Wonderland. A Mad Tea Party. Lewis Carroll.
The brilliant Carroll had a field day with logical fallacies in the fictional mad world of hyper rationalism. Alice in Wonderland still passes for children’s fiction. The verdict in Halbig versus Burwell is a Tea Party no less. Alice from Dickensian London, if magically teleported to present day might have believed she had fallen in to a rabbit hole.
The DC Court of Appeals ruled in a narrow 2-1 decision that citizens who bought insurance in the individual marketplace in states where the Federal government runs the exchange do not qualify for subsidies. But in states with state-run exchanges they do qualify for subsidies. The IRS’s subsidies are unlawful in the former but perfectly lawful in the latter.
The statutory language in the Affordable Care Act (ACA) states that subsidies are available to those “enrolled in an exchange established by the state…”
Personally, I can’t see the issue. What’s the difference, in principle, between subsidizing citizens in exchanges established BY the states and citizens in exchanges established FOR the states by the Federal government?
Is this the first war between prepositions in human history?
The argument is that we must follow the rule of the law as it is written. Section 1401 (rules on who can get subsidy) applies to Section 1311 (the one about how exchanges are set up) not Section 1321 (the one about Federal government running the state exchanges when states don’t).