Times Argus – MONTPELIER — Emails between the state and an economist under fire for impolitic comments he made years ago highlight the administration’s work since the summer preparing a long-awaited financing plan for Gov. Peter Shumlin’s proposed universal, publicly financed health care plan.
Shumlin, a second-term Democrat who won a slim plurality last month and is expected to be selected for a third term by the Legislature in January, has promised to deliver his financing plan on Dec. 29 or 30. But the administration is still frantically preparing its report as the deadline looms.
The Vermont Press Bureau obtained nearly 2,400 pages of emails between Jonathan Gruber and state officials that detail the work Jonathan Gruber, an MIT economist, has been doing for the administration.
He has become a lightning rod and his work has been questioned by many interests — including high-profile Republicans in Vermont — because of questionable comments he made in the last several years that surfaced recently in video recordings.
During a 2011 hearing of the House Health Care Committee, then-Chairman Mark Larson read aloud comments written by John McClaughry, a former state senator and policy advisor for President Ronald Reagan. McClaughry, in his published commentary, said Shumlin’s health care proposal would lead to higher taxes, ballooning costs, poor health care facilities, disgruntled providers and long waits for care, among other concerns.
“Was this written by my adolescent children by any chance?” Gruber asks on a video recorded by True North Reports.
In other videos Gruber credited “the stupidity of the American voter” with getting the federal Affordable Care Act passed.
Gruber agreed to forego any further payments from the state for the work he was contracted to do. However, graduate assistants and others working with Gruber are still being paid and carry out work on behalf of the state.
In a July 7 email to Michael Costa, Shumlin’s deputy director of health reform and the tax expert spearheading the administration’s financing plan, Gruber expressed unbridled enthusiasm at the opportunity to help the state craft a single-payer health care plan.
“[T]hat was an AWESOME call. Thanks so much for making the time. I am really excited to work with you all — I think we have the chance to really make history here. A central piece of the (federal Affordable Care Act) is state flexibility to go above and beyond what the law envisions. Vermont can be a real leader in that role,” he wrote.
Many emails that included details of the administration’s plan were redacted, with the administration citing executive privilege.
On July 16, Costa wrote to Gruber that the attorney general’s Office had approved the contract, but a provision was added stipulating that Gruber “may advise the Governor on policy matters related to the project.”
“This language makes clear that we consider our work with you subject to executive privilege,” Costa wrote.
The administration has been under a constant barrage from opponents for hiding its financing plan, which, according to Act 48, the law passed in 2011 that laid the foundation for health care reform, was supposed to be submitted to the Legislature in January 2013.
Robin Lunge, Shumlin’s director of health care reform, said the clause in the contract was included to protect her policy advice to the governor. Gruber has not contributed policy advice to the governor, according to Lunge.
“In order for him to run our plan through his model I need to share my policy recommendations and advice to the governor with him,” Lunge said in an interview.
“It’s a way of protecting … my relationship with the governor and for me to get information from his model that I can use to bring back to the governor,” she said. “It’s less about him offering policy suggestions, it’s more about him getting me information about my policy suggestions.”
The same provision is also included with other contractors, Lunge said.
Emails show that Gruber has been requesting tax and demographic data from the state continuously since signing his contract in mid-July for the Gruber Microsimulation Model he developed to simulate the implementation of Shumlin’s plan and test various financing mechanisms.
Lunge said there were only two or three people in the country that had the type of microsimulation model needed to check the administration’s proposals. The model has been continuously changed to produce the best possible information.
“We wanted to make sure that whoever we engaged with customized it for Vermont, because one of the things we know about Vermonters and Vermont legislators is they like to know that it’s specific to Vermont,” Lunge said. “We didn’t just want a national model, for someone to just take our plan and run it through a national model.”
Gruber and administration officials spent months gathering pertinent data for the model.
“The whole first stage of the product is collecting huge quantities of data that we have that is Vermont specific from different parts of state government, from different surveys, from the insurers, shipping that all to Gruber, in this case, and having his programmers enter it and customize the underlying data set that this model relies on,” she said.
The team also had to customize “assumptions” so that the results fit the legal requirements of the Affordable Care Act as well as any new requirements to come under Green Mountain Care, the name of Shumlin’s health care plan.
Lunge said that work is ongoing, despite the promised release later this month.
“It is an iterative process where we’re going back and forth with him and in some instances changing our plan because we didn’t like what happened as a result of the output,” Lunge said. “That is still happening now and will continue to happen over the next couple of weeks depending on how soon we get to a result that we like.”
VTDigger.com reported last week that the administration’s plan will utilize an 8 percent payroll tax and a personal income tax component to raise the estimated $2 billion to fund the system. That report was based on interviews with members of the governor’s Business Advisory Council, created by executive order to give the governor feedback on policy.
The council has been shown various proposals for their reaction, according to Lunge, which has helped the administration gauge the impact on the state of various tax schemes.
Lunge declined to comment on the VTDigger report, but said the administration is still testing various options with Gruber’s simulator. Three different benefit options have been created, and two have been tested.
“We’re trying to decide if we’re going to bother modeling the third,” she said. “If we come to a decision then we don’t need to model the third and it’s a waste of time and money.”
Meanwhile, several financing proposals are still being worked on and the administration has yet to settle on one recommendation as required by Act 48.
“It’s a little less black and white because it’s a combination of options. We’re making tweaks to the different options as we go, so that’s a little bit harder to quantify,” Lunge said. “We might tweak one component and run it, then tweak another component and run it then tweak both components and run it.”
Lunge said administration officials would not comment on specific proposals until the report is finalized later this month.
“I am not satisfied with our results where I think that we wouldn’t continue to make what I would call significant changes,” Lunge said. “One of the challenges with this kind of modeling is that numbers take on a life of their own and when we announce our plan we want to make sure we’re announcing our proposal. I’m worried about muddying the waters further.”
Shumlin spokesman Scott Coriell said the correspondence between Gruber and the state show what the administration has been saying — there is no financing plan yet.
“I think there’s been this perception that we’ve been sitting up here with this plan in Michael Costa’s desk drawer. But it’s just not the case,” Coriell said.
There was little back-and-forth between Gruber and state officials about the controversy that emerged in November. On Nov. 12, Costa queried Gruber via email about the recorded comments. He included a forwarded email about the controversy.
“I’m loath to distract you form your excellent work, but this forward is making the rounds up here. Would you care to clarify your comments with additional context? Happy to discuss by phone,” Costa wrote.
Gruber replied a short time later to say he did not have much to say about it.
“I am laying low on this. Anything I say will just feed the haters. I went on MSNBC yesterday and apologized but other than that I have been strongly advised to stay off the radar,” Gruber wrote.
“Got it. Thanks,” Costa replied.
State officials said much of the state’s communication with Gruber about the controversy was handled by Lawrence Miller, Shumlin’s chief of health care reform. Most conversations took place by telephone.
Coriell said there was little the administration could do, and still needed Gruber to complete the contracted work.
“My recollection was the comments were kind of the comments, and he had sort of explained them in the national press a little bit. The problem is the controversy was all about comments he made two years ago,” Coriell said. “They weren’t exactly related to what he was doing for us. To some extent, it was a big deal because (reporters) were writing about it and we had to respond, but we weren’t really in a position of saying to Jon Gruber, ‘Why did you say this? What were you thinking?’ It was kind of like comments he made on his own.”
The controversy appears to have taken some toll on Gruber. On Nov. 19, Gruber wrote to Costa in an email that he needed to take the night off from his work.
“(P)retty traumatic day today, as you can imagine. But the work moves forward. Will try to have an answer to you in the morning, but I think I need to do something else tonight …” he wrote.
“Yes it was. I didn’t intend to be rude,” Costa replied.
The administration’s original plan was to finalize microeconomic impacts of the financing plan with Gruber’s simulator then use that data to study macroeconomic impacts. But the plan changed when the administration decided to ensure that everyone involved in reviewing the plan agreed upon the data used.
The emails highlight collaboration among interested parties to ensure they are using the same underlying data. Economists for the administration and Legislature, as well as contractors for both, coordinated information to ensure that when the final plan is reviewed, questions will be about policy rather than data.
“What we were trying to do is make sure that we had for the baseline some agreed-upon data sets and trend assumptions,” Lunge said.
That decision added time to the process, and officials began to worry about the delay. On Oct. 16, Costa noted that concern in an email to Gruber.
“We should catch up next week about the macro. I am worried that piece is going off the rails,” Costa wrote.
“It was right around that time when we shifted gears to just doing that with Moody’s to doing the consensus, and I think he was concerned that that was going to push out the time line, and quite frankly, it has pushed out the time line,” Lunge said. “But we think that’s OK. We can handle that.”
The plan will not include a response to each of the so-called Mullin Triggers, a set of requirements that Sen. Kevin Mullin, R-Rutland, added to the legislation.
Lunge said a macroeconomic analysis will not yet be completed. One of the Mullin Triggers requires the administration to prove that Green Mountain Care will not have a negative impact on the state’s economy as a whole. That analysis will be completed by Tom Kavet and Jeffrey Carr, economists for both the administration and the Legislature.
Other triggers will be met by various entities. A consultant will show that the benefits offered under the plan will have at least an 80 percent actuarial value. The administration, through it’s own analysis, will show that the financing plan is sustainable, that administrative expenses will be reduced and that cost-containment efforts will result in a reduction in the growth rate of health care spending, according to Lunge.
“We will be looking at addressing each of them in the proposal, maybe not on the 29th, because some of it will be a work-in-progress,” she said.
Officials say the report will be completed and ready for release at the end of the month.
“We’re going to do it. I may not sleep, but we’re going to do it,” Lunge said.
The report will begin the conversation on how to move forward, Coriell said.
“It will very much be a starting point for a conversation with the Legislature,” he said. “It’s not going to be us saying, ‘This is the way to go.’ It’s also not going to be my way or the highway. It’s not going to be, ‘Pass this bill now.’”