UPDATED: Jonathan Gruber Behind Flawed HealthSource RI Projections

Professor Jonathan Gruber, of MIT, is on his way to becoming a household name after multiple videos emerged in which the Affordable Care Act designer admitted that provisions in the law were designed to deceive the American people.

In the most direct video, Gruber states that exploiting “the stupidity of the American voter… was really, really critical for the thing to pass.”  He was arguing in favor of the lack of transparency with which the federal legislation was created and pushed through to become a law.

In one video, from a 2012 Honors Colloquium at the University of Rhode Island, Gruber proclaimed, “It’s a very clever, you know, basic exploitation of the lack of economic understanding of the American voter.”  Since the video came to light, URI has removed it from YouTube and its own Web site.

This week, attention has turned to the fortune that Professor Gruber has made helping to design and implement the Affordable Care Act (known colloquially as ObamaCare).  Writing in the Washington Examiner, Byron York reports that individual states paid Gruber hundreds of thousands of dollars for consultation as they set up the health benefits exchanges created by the law.  Deroy Murdock puts Gruber’s known total take from ObamaCare at $5.9 million, but his list is incomplete.

One missing number on the list is the total in contract fees that Jonathan Gruber collected from the state of Rhode Island.  UPDATE (11/19/14, 4:27 p.m.)According to a spokeswoman for HealthSource RI, the payments to Mr. Gruber totaled $40,000, as a subcontract with Wakely Consulting Group.  According to the RI Center for Freedom & Prosperity’s RIOpenGov vendor-payments application, Wakely has received over $4.6 million in both fiscal 2014 and fiscal 2013 and $1.4 million in fiscal 2012.

During its own design phase, Rhode Island’s health benefits exchange, HealthSource RI, submitted multiple requests for funding from the federal government, totaling more than $100 million.  A request dated May 15, 2013, five months prior to the launch of the exchange’s Web site, mentions Gruber:

Dr. Jonathan Gruber worked with RI to model different scenarios of take-up rates of the uninsured, as well as to estimate rates of individuals moving between private insurance and Medicaid or the Exchange.  This work resulted in estimates of the numbers of Rhode Islanders that will be enrolled in Medicaid, the Exchange (subsidized, unsubsidized, and SHOP) and private insurance in 2014.

The number of of paying customers that HealthSource projected at that time turned out to be three times higher than the actual results, with the projection of people paying the full-cost of their plans overshooting reality by six times.  The projections for people receiving Medicaid (costing the state and federal governments taxpayer dollars) turned out to undershoot reality by even more.  (The ratio was five times in March, but it has grown.)

Failing to achieve its projected volume of customers left HealthSource struggling to justify its budget to state law makers during the budget process earlier this year.  Ultimately, the federal government stepped in to buy the exchange another year without local battles, but not before it became reasonable for observers to feel like they weren’t getting the whole story about the costs of the exchange or its intended objectives.

Meanwhile, Medicaid accounts for the majority of the $66.2 million by which state agencies are overspending their budgets, this year, according to a recently released report.

The revelations concerning Jonathan Gruber’s willingness to deceive the American people in order to pass legislation raise the question of how pervasive his attitude is throughout government at the state and federal levels.

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