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Did Jonathan Gruber earn ‘almost $400,000’ from the Obama administration?

MIT Economist Jonathan Gruber speaks at a conference on March 12, 2014, in Boston. (REUTERS/Dominick Reuter)

MIT economist Jonathan Gruber “was paid almost $400,000 by this administration.”

— Sen. John Barrasso (R-Wyo.), on Fox News’s “On the Record,” Nov. 12, 2014

Republicans are demanding hearings into videos that have emerged in recent days of MIT professor Jonathan Gruber making impolitic remarks about the Affordable Care Act.

Why should Gruber’s comments matter? Because Gruber is well-known in health-care circles as one of the intellectual godfathers of Obamacare and the very similar law in Massachusetts (sometimes called Romneycare), though people involved in ACA deny he was “an architect” of the ACA. (House Democratic Leader Nancy Pelosi (Calif.) claimed she did not know who he is, even though she once had touted his work.)

Barrasso, in the Fox News interview, said Gruber’s comments about the “stupidity of the American voter” were so reprehensible that “he ought to just give the money back.”

Did Gruber really earn nearly $400,000 from the administration — and if so, why?

The Facts

In 2009, just one month after President Obama took office, the Department of Health and Human Services put out a sole-source solicitation titled “Technical Assistance in Evaluating Options for Health Reform.” The contract would be with Gruber, who the document said was the only person “reasonably available to satisfy agency requirements.”

As the agency put it, “Dr. Gruber developed a proprietary statistically sophisticated micro-simulation model that has the flexibility to ascertain the distribution of changes in health care spending and public and private sector health care costs due to a large variety of changes in health insurance benefit design, public program eligibility criteria, and tax policy.”

The model, the Gruber Microsimulation Model, is the coin of the realm, in large part because it is similar to the model used by the Congressional Budget Office. That means administration policy-makers could predict with reasonable certainty how CBO would score legislation. Given that legislation in Washington often falls or rises depending on the CBO score, that made this model a very powerful tool for administration officials.

The first four months of the contract could not be found on the Web site, but in June 2009, HHS renewed the contract for eight months, with a value of $297,600. Gruber in an e-mail confirmed that the first part of the contract was for $95,000.

That adds up to $392,600 — or “almost $400,000.”

Gruber’s consulting was largely unknown at the time, and eventually it became an issue as he had been frequently quoted by journalists and lawmakers who may not have known of his connection to the administration; he also generally did not disclose his connection when writing opinion articles.

In one especially fishy circumstance, Nancy-Ann DeParle, at the time director of the White House Office of Health Reform, wrote about Gruber’s work on the White House blog on Nov. 29, 2009. “MIT Economist Confirms Senate Health Reform Bill Reduces Costs and Improves Coverage” was the headline on the post.

DeParle made no reference to the fact that Gruber had already earned hundreds of thousands of dollars working for the administration. She described him as an “MIT economist who has been closely following the health insurance reform process.”

(The emphasis on reducing costs in Gruber’s report is especially interesting in light of the Gruber video that emerged Thursday. “What the American public cares about is costs,” Gruber said in 2010. “And that’s why even though the bill that they made is 90 percent health insurance coverage and 10 percent about cost control, all you ever hear people talk about is cost control.”)

In any case, the passage of the Affordable Care Act in 2010 has been lucrative for Gruber and his microsimulation model. All told, he has been hired by at least eight states to provide advice or assist in creating the health-insurance exchanges that are at the heart of the Affordable Care Act: Colorado, Connecticut, Maine, Michigan, Minnesota, Vermont, West Virginia and Wisconsin.

Not all of the contracts could be found on public Web sites, but here is a sampling. In some cases, Gruber worked with other consultants, so the fees were shared. These figures also might not represent the final payout, and of course these are gross figures, before expenses. But it’s safe to say that about $400,000 appears to be the standard rate for gaining access to the Gruber Microsimulation Model.

Michigan: $481,050

Minnesota: $329,000

Vermont: $400,000

Wisconsin: $400,000

Gruber has also earned more than $2 million over the last seven years for an ongoing contract with HHS to assess choices made by the elderly in Medicare’s prescription-drug plan.

The Pinocchio Test

Barrasso quite accurately pegged Gruber’s contract for advising the administration during the crafting of the Affordable Care Act as “almost $400,000.” He earns a coveted Geppetto Checkmark.

In the meantime, The Fact Checker is wondering why he did not become a health economist. Clearly, Gruber’s model became even more in demand after Obamacare was signed into law.

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