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Obamacare Architect: If A State Doesn't Set Up An Exchange, Its 'Citizens Don’t Get Their Tax Credits'

12:53 PM, Jul 25, 2014 • By JOHN MCCORMACK
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Earlier this week, a three-judge panel on the D.C. Court of Appeals ruled 2-1 that the plain text of the Affordable Care Act only authorizes health insurance subsidies for residents of states that set up their own exchanges. Therefore, the court ruled, the IRS had illegally provided Obamacare subsidies to millions of people in 36 states that relied on the federal exchange.

It's far from clear that the decision will be upheld upon appeal (the 4th Circuit has ruled the law is ambiguous, so the IRS was free to do what it did). But if it stands, the entire law could come crashing down. 

Obamacare's supporters have argued that it's foolish to think Congress didn't intend for Americans to get subsidies in states that didn't set up their own exchanges: They ignore the plain text of the law and point out that no member of Congress publicly made that claim while the law was being drafted. On the other hand, there isn't a record of any member of Congress saying before the bill became law that people would get subsidies outside of state exchanges. 

But a newly-released video shows MIT professor Jonathan Gruber, widely acknowledged to be the architect of Obamacare, saying in 2012 that "if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill."

Gruber probably has a better understanding of the law than anyone in the country. According to the New York Times, after he "helped the administration put together the basic principles of the proposal, the White House lent him to Capitol Hill to help Congressional staff members draft the specifics of the legislation." But he now tells the New Republic's Jonathan Cohn that his clear statement that people wouldn't get subsidies in states without exchanges "was just a speak-o—you know, like a typo."

That claim looks even more ridiculous than it already does if you watch the video of Gruber's 2012 remarks (first published by Ryan Radia of the Competitive Enterprise Institute):

That clearly doesn't sound at all like a "speak-o."

Update: John Sexton reports at Breitbart that another video shows Gruber making the same claim during a January 2012 speech.

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