Gruber model errs in Colorado as Vermont prepares to rely on data

By Bruce Parker | Vermont Watchdog

Jonathan Gruber’s health care forecasting is failing in Colorado as Vermont’s Gov. Peter Shumlin prepares to use the economist’s math for single-payer health care.

As Vermonters anxiously await a Gruber-modeled financing plan for Green Mountain Care, modeling done for Colorado’s health exchange by Jonathan Gruber Associates has proven wildly erroneous.

In 2011, following Colorado’s decision to set up a state health exchange for Obamacare, the state hired Gruber to forecast enrollment trends from which the state and federal government could estimate costs.

According to a presentation delivered to the Colorado Health Benefit Exchange Board on Sept. 16, 2011, and provided to Watchdog.org, Gruber predicted Medicaid enrollment in Colorado would grow from 440,000 enrollees in 2011 to 710,000 enrollees in 2016.

Actual 2014 data reported by the Colorado Department of Health Care Policy and Financing shows the number of people enrolled in the state’s Medicaid program has grown to more than 1.1 million — a miscalculation of about 400,000 enrollees.

The miscalculation is growing rapidly, as the state reported 12,533 new Medicaid sign-ups in the two-week period between Nov. 15 and Nov. 30.

“Medicaid and CHP+ enrollments over the last few weeks show that we are still finding and enrolling low-income Coloradans into coverage,” Susan Birch, executive director of the Colorado Department of Health Care Policy and Financing, said in a Dec. 2 news release.

The errors are significant for Vermont. While Shumlin has denounced Gruber for video statements disparaging American voters and rejecting government transparency, he has continued to defend Gruber’s math.

In November, Shumlin said Gruber would continue to serve as “a calculator” for single-payer financing options, despite not receiving additional pay. State health officials assert Gruber is one of only a few people in the nation capable of providing customized health care forecasting data for states. Importantly, the Gruber Microsimulation Model (GMSIM) used for Colorado also is being used to create financing scenarios for Green Mountain Care.

“His models can’t be relied on for policy. They’re not ready for prime time,” Linda Gorman, director of the Health Care Policy Center at the Independence Institute in Colorado, told Vermont Watchdog.

Gorman, an economist who serves as a member of Colorado’s Blue Ribbon Commission for Health Care Reform, recalled that the Gruber Microsimulation Model was hailed as a breakthrough methodology for forecasting health care data, despite its use of surveys and small samples to predict Coloradans’ health insurance choices.

“They said the great thing about using the Gruber model instead of the standard econometric model is that we’re going to use a lot of survey data. They basically set up a representative population and said this is how people behave based on surveys. That kind of thing works really badly for a small state like Colorado,” Gorman said.

According to Gorman, a miscalculation of 400,000 people is a costly error since each Medicaid enrollee costs taxpayers about $2,000. Gruber’s Medicaid enrollment error means Colorado’s cost estimates for Medicaid expansion are presently off by about $800 million.

“Remember, they were trying to make the law come in as saving money — so they’ve way underestimated the cost of insuring these additional Medicaid people,” she said.

Medicaid enrollment wasn’t the only error in Gruber’s presentation. Gruber also wrongly estimated sign-ups for the state’s subsidized and unsubsidized plans under the Affordable Care Act.

According to Gruber’s simulations, Colorado could expect to have 470,000 people enrolled in the subsidized plan and 150,000 in the unsubsidized plan by 2016. However, actual data for 2014 shows 75,067 individuals are enrolled in the exchange subsidized plan and 52,165 in the exchange unsubsidized plan — a underestimate that indicates paying customers aren’t signing up through the state exchange.

“So far, the data suggest that the exchange is a lot less popular than predicted,” Gorman said.

“What that is showing is the model has not so far done a very good job of predicting enrollment in these health benefit exchanges that were supposed to be the centerpiece of Obamacare.”

The Gruber Microsimulation Model also provided flawed predictions to the federal government. A 2012 article in Forbes notes that Gruber erred in predicting that insurance premiums would go down once the Affordable Care Act became law:

Before the Patient Protection and Affordable Care Act became law, Gruber published a widely-cited analysis, using his Gruber Microsimulation Model, in which he asserted that in 2016, young people would save 13 percent, and older people 31 percent, on their insurance premiums. Gruber’s numbers were used to rebut an October 2009 analysis from PriceWaterhouseCoopers, which projected that non-group (a.k.a. individual-market) premiums would increase by 47 percent over the same period.

By 2012, however, Gruber reversed course and began informing Wisconsin, Minnesota and Colorado that the law would increase non-group premiums by 19 percent to 30 percent, according to the Forbes article.

Since early November, when a series of Jonathan Gruber videos revealed the economist crafted policy in a “tortured way” to conceal costs, several Vermont lawmakers have attacked the credibility of Gruber as a calculator for Vermont’s new single-payer health program.

This week, Gruber was called to Capitol Hill to explain his comments to the House Oversight and Government Reform Committee. While the MIT professor apologized for making “glib” and “demeaning” comments, he did not suggest his work was compromised.

Gruber’s continued defense of his consulting work didn’t escape Darcie Johnston, founder of Vermonters for Health Care Freedom, a group that opposes single-payer health care.

“Jonathan Gruber’s answers to the Oversight Committee should give Vermonters pause. Governor Shumlin should fully terminate Prof. Gruber from his Vermont contract. Now that Gov. Shumlin and Vermonters have seen how deceitful and calculating he is, there is no way to trust his professional judgment or his economic modeling,” Johnston said in an email to Vermont Watchdog.

Contact Bruce Parker at bparker@watchdog.org