Yet another rough week for Jonathan Gruber.

Photographer: Chip Somodevilla/Getty Images

Give Jonathan Gruber a Break

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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Jonathan Gruber -- yes, that Jonathan Gruber -- is in trouble again. This time he's being pummeled by liberal state governments for whom he's done work. Massachusetts Governor Charlie Baker demanded Gruber's resignation from the board of the state's Health Connector insurance website. And more troubling, the Vermont state auditor has raised questions over bills Gruber submitted to the state government for consulting work. The matter is being referred to Vermont's attorney general.

It's another bad week for a guy who's had a lot of bad weeks recently. Is it merited? For all that Gruber and I vehemently disagree about health-care policy, and for all that I think his comments about stupid voters displayed a galloping case of unseemly arrogance toward the people he professed to be serving, I'm not entirely sure it is.

Though Vermont's accusations sound worse, I actually think Massachusetts has the stronger case for firing Gruber. Baker asked for -- and received -- resignations from four members of the board, including Gruber, which gives him control over the body. And while it's tempting to think that this is an elaborate excuse for targeting one Jonathan Gruber, political liability extraordinaire, it seems worth mentioning that the performance of Massachusetts' Health Connector was an absolute disaster in the transition to the Affordable Care Act. Last year's operation was so bad that the state scrapped the whole operation and started over. This year the system performed better, but there were still major glitches. It's not unreasonable for a new governor to come in from a different party and want to appoint some people who weren't involved in the prior catastrophe.

Vermont, on the other hand, seems to be elevating lazy invoicing to a potential criminal offense. Here's the nub of the accusation: Gruber submitted two consecutive invoices in September and October claiming the exact same figures -- 100 hours for Gruber at $500 per hour, 500 hours for his research assistants at $100 per hour. Only one research assistant worked on the project, according to the auditor's report.

Those numbers sure are suspiciously round, aren't they? They're also pretty high -- as a consultant, I once billed nearly 300 hours in a single month, and a February to boot, but I kind of had to stop sleeping to do it.  But they're not physically impossible. Moreover, the auditor doesn't seem to be arguing that Gruber was fraudulently billing for work the state didn't get: "In spite of concerns about the invoices, it appears the administration was satisfied with the work of Dr. Gruber and his RA," the report says. This is not a case of a contractor billing for work that was never performed, or an hourly employee running up his paycheck for hours he wasn't actually there. It's a case of a contractor who was given a contract for a deliverable, delivered it, and then threw together an invoice where the numbers added up to the amount the state was supposed to pay him.

Would it be better if Gruber had kept better records and put together an accurate and detailed invoice that outlined everything he did? Sure. Should the state have paid him less for the work he did? That's hard to say. Gruber has spent a lot of time and energy constructing a model that he now sells to states to help them make projections about health-care projects. That's a valuable asset that states would have to pay a lot of money to replicate, and as a good capitalist, I find it hard to argue that he should give it away at cost plus 10 percent. I mean, it would be nice if he did. But it would also be nice if you came over right now and brought me some raspberry pie.

That said, Gruber signed a contract specifying detailed invoices and a certain amount of hourly work, then failed to provide the invoices and supporting evidence of the work performed. A private company might well let that slide, but a public entity almost necessarily operates by an elaborate thicket of rules designed to prevent fraud and corruption. Gruber might not get paid for his final invoices, and he probably deserves that. But I don't really see a case for getting the attorney general involved.

For all my many quarrels with Gruber's ideas and his conduct, he remains a good economist, and it would be a shame to see the events of the last year destroy him. I'm all for letting him take his lumps, but I also wrote a whole book about how America is a great place for second chances. And the best way to demonstrate our country's greatness is to extend that generosity -- even to folks who think the rest of us are kind of stupid.

  1. Billable hours are not the same as your working hours, because they are not supposed to include time spent eating, getting from place to place, or taking care of certain physical necessities that we will leave unmentioned.

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Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Brooke Sample at bsample1@bloomberg.net