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Posted on Monday, November 17, 2014

Will Jonathan Gruber’s Comments Impact the Supreme Court?

Jonathan Gruber, the MIT professor who was paid by the government to consult on the creation of the Affordable Care Act, recently made headlines with his controversial ObamaCare comments about the “stupidity of the American voter.”  His other comments, however, deserve a second look.  One comment shows how the Chief Justice may have been misguided by the government in his tie-breaking vote to support the Affordable Care Act, while another comment could have a big impact when the Supreme Court soon decides a landmark case.The Supreme Court’s narrow vote supporting the Affordable Care Act depended on Chief Justice Robert’s conclusion that the Act created a tax, and thus fell within one of the constitutionally enumerated powers of Congress to support its creation of the Act.  However, Gruber’s controversial comments included his assertion that the bill “was written in a tortured way to make sure CBO did not score the mandate as taxes.”  If this comment was accurate, it conflicts with the Justice Department’s argument, accepted by the Chief Justice in casting his tie-breaking vote to support the law, that the Act created a tax and Congress therefore had the authority to enact it.

Gruber also asserted that Congress “want[ed] to sort of squeeze the states” to feel pressure to set up their own insurance exchanges, and that “if you’re a state and you don’t set up an exchange, that means your citizens don’t get tax credits.”  Once again, Gruber is conflicting with the Administration’s position in the upcoming King v. Burwell Supreme Court case.  In King, the Supreme Court will decide if the government exceeded its authority in promoting tax credits and subsidies for residents of states that did not create their own exchange.  According to the language of the Affordable Care Act and Gruber’s own comments, such credits are not allowed – for two thirds of the states that never gave in to the ‘squeeze’ to set up their own exchange – and therefore a big part of ObamaCare’s financial engine should fail.  This contrasts with the Administration’s argument pulling the Court in the opposite direction, asserting that the Act intended to allow credits and subsidies for all such states in order to fund ObamaCare.

Both sides cannot be right, and the Justices will need to resolve this in a few months. If the majority of the Court follows the language of the statute and takes professor Gruber’s comments to heart, a big part of ObamaCare’s funding will be disallowed since the credits and subsidies challenged in King will be struck down.  In the meantime, the next time a former consultant for the Administration makes sarcastic comments about the American voter and the law, he may want to consider whether the nine people wearing robes in the Supreme Court building will hear what he has to say before they cast their next vote.  Time will tell if his words will influence the Supreme Court to reach a different result.

Seth Berenzweig is the founding and Managing Partner of Berenzweig Leonard, LLP, and is a Fox Business and Bloomberg TV contributor on breaking news such as ObamaCare and Supreme Court cases.

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