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The Latest Obamacare Lie That Just Won't Die

First they said Obamacare would create death panels. Then they said the law would cover undocumented immigrants. Now they’re saying President Barack Obama gave Congress a special exemption, so that lawmakers and their staff members aren’t subject to the law.

The story is everywhere, from the Wall Street Journal editorial page to Fox News. Some high-profile Republicans are in high dudgeon over it. Senate Minority Whip John Cornyn called it an “outrageous exemption for Congress.” Right-wing groups like FreedomWorks are even more worked up. “Ready your pitchforks,” one of the group’s officials said last week.

As is often the case with these arguments, this one contains an element of truth. Obamacare really does treat congressional employees differently from other people. But that’s because of an amendment written by Senator Chuck Grassley, the Iowa Republican. The amendment—almost certainly a political stunt designed to embarrass the Democrats—created an ambiguity in the law that the Obama administration had to clarify. Last week the administration issued a ruling and, sure enough, it is getting political grief over it. But there’s no reason it should.

Today, lawmakers and the people who work in their offices get insurance via the Federal Employees Health Benefits Plan, or FEHBP. It’s the same health insurance option that other federal employees use. When the architects of the Affordable Care Act drew up legislation, they had no plans to meddle with this arrangement. Just like the people working for Intel or JCPenney would get to stay on their company health plans, the people working on Capitol Hill would get to stay on theirs.

Grassley had other ideas. Obamacare is creating new insurance marketplaces, one for each state, where people can choose their own insurance. The marketplaces are only for people who don’t have access to an employer policy. But Grassley suggested an exception. He introduced an amendment that would force members of Congress, and their advisers, to give up federal employee coverage and buy through the new exchanges instead.

Grassley insisted he wanted only to promote good public policy. If members of Congress were dependent on the exchanges, he suggested, they’d have a direct stake in their success. But Grassley was also the ranking Republican on the Finance Committee. And, by that point in the debate, he’d all but committed himself to opposing legislation. He almost certainly figured the Democrats would vote down his amendment, rather than relinquish federal employee coverage. And that would give Republicans a chance to pounce. If Obamacare coverage is good enough for you, the Republicans could then tell voters, why isn’t it good enough for them?

As it turns out, Grassley was wrong. Democrats didn’t reject the amendment. They accepted it, and now it’s part of the law. But that created a very weird situation. The federal government, like most large employers, not only provides the opportunity for its workers to get insurance. It also pays a large portion of the premium. Now that lawmakers and their advisers were going into the exchanges, what would happen to that contribution? Would they just lose the money?

The answer, the administration decided last week, is no. Lawmakers and their staffs could keep their employer contributions, and apply that money towards the cost of whatever insurance they buy in the exchanges. It's actually true to Grassley's ostensible purpose, which was making sure members of lawmakers and their advisers have a stake in the success of the exchanges. As New York magazine's Jonathan Chait pointed out recently:

If you think, as Republicans do, the exchanges will be a train wreck, then Congress and its staff will soon be suffering a dire fate. But the punishment won’t be compounded by being packaged with an additional pay cut. And if you think the exchanges are likely to work out pretty well, at least in the states where the government isn’t sabotaging them, then it won’t be punishment at all.

The irony here is even thicker than it might seem. Republicans have warned that, because of Obamacare, large companies are going to stop offering insurance to employees. But experts predicted that few businesses would and, so far, it looks like the experts were right. The only large employer that seems to be kicking people off an insurance plan right now is Congress—and that's only because Grassley's amendment dictates it.

Anybody following this story should understand this. A few months ago, the Washington Post’s Ezra Klein wrote a widely circulated piece laying out the facts. Then, last week, the Huffington Post’s Sam Stein interviewed a former congressional staffer about what Grassley really wanted:

"The intent was that Congress would be required to get the same plans that are available in the exchange and that the [Federal Employees Health Benefits Plan] would continue to operate," said the former staffer, who would only speak about the initial goal of the amendment on condition of anonymity. "The employer contribution, the tax treatment of it, the contributions by staff, the amount of them, every respect would remain intact."

"It would have been a much different notion if the amendment would have been to explicitly end the federal government contribution," the staffer added. "You can imagine that the kinds of concerns being raised now—about staff and their ability to recruit and retain expertise — would have come up at the time the amendment was offered."

As far as I know, nobody has challenged either Klein’s analysis or Stein’s reporting. While smarter critics like Reason's Peter Suderman grasp the nuances, most people writing and talking about this don't seem interested in such details. Like the death panels and immigration myths, the suggestion that Obama made Congress exempt from his health care law seems impervious to reality.

Jonathan Cohn is a senior editor at the New Republic. Follow him on twitter @CitizenCohn