State's Contract With Economist Jonathan Gruber Under Scrutiny

Jan 22, 2015

Health economist Jonathan Gruber won notoriety last year for his unflattering remarks about the “stupidity of the American voter.” But here in Vermont, the state auditor is far more concerned about the MIT professor’s billing habits than his ill-advised public remarks.

Gruber helped design the federal Affordable Care Act. And he later eared criticism nationally when footage of his comments about U.S. voters went viral. The dust-up resonated particularly loudly in Vermont, where the Shumlin administration had hired Gruber to perform economic modeling on its ill-fated single-payer health care system.

Audio from this story will be posted at approximately 11 a.m. on Friday, Jan. 23.

The single-payer financing proposal has since been shelved, thanks in part to the results of Gruber’s modeling. But for State Auditor Doug Hoffer, serious questions remain about the state’s contract with the noted MIT economist.  

“Contracts are a serious business,” Hoffer says. “And if you agree to the terms of a contract then you have an obligation to meet those requirements, and he has not met those requirements. And the people who paid him, i.e. the taxpayers of the state of Vermont … We have every reason to expect him to abide by the terms of the contract. And there are some outstanding questions that we have a right to know the answer to.”

Hoffer is a Progressive/Democrat. And unlike some of Gruber’s previous adversaries, he doesn’t stand to gain politically by scrutinizing the state’s contract with him.  

"Contracts are a serious business. And if you agree to the terms of a contract then you have an obligation to meet those requirements, and he [Jonathan Gruber] has not met those requirements." - State Auditor Doug Hoffer

Hoffer says he decided to conduct the inquiry after being contacted, independently, by three different lawmakers – Rep. Oliver Olsen, an Independent from Jamaica; Sen. Joe Benning, a Republican from Caledonia County; and. Sen. Chris Bray, a Democrat from Addison County.

The Shumlin administration has paid Gruber $160,000 so far, as payment on two invoices submitted by Gruber last year. But Hoffer says those invoices lacked even basic information about the work Gruber or his workers performed. Each invoice billed $100,000 – $50,000 for 100 hours of work by Gruber, a $500 per hour; and $50,000 for 500 hours of work by his “research assistants,” at $100 per hour.

The state “held back” 20 percent of the total bill pending final resolution of the contract, as is customary. The contract originally had a maximum value of more than $400,000. After the national controversy surrounding Gruber ignited, the state amended the maximum value, to $260,000, and said it would pay only for work performed by Gruber’s assistants, not work done by Gruber himself.

“The contract called for a description of the work performed. He simply says we worked these many hours. On the face of it, it does not appear to meet the terms of the contract,” Hoffer says.

Hoffer says he’s asked Gruber for more detailed documentation of his work. Hoffer says Gruber's responses to those inquiries have been "unsatisfactory."

Hoffer made the requests to Gruber through Robin Lunge, director of health reform for the Shumlin administration. Specifically, Hoffer says he wants more substantial documentation of the number of “hours worked, the employment status of research assistant or assistants, [and] the actual dollar paid to them.”

Lunge says that the invoices do meet the minimum invoicing requirements stipulated in the contract. She says the invoices show both the number of hours worked, as well as a description, however brief. The description in the invoice reads, quote “consulting and modeling on the Green Mountain Care proposal.”

"I feel confident that we've gotten our money's worth in terms of both the amount of work as well as the quality of the work that we received." - Robin Lunge, director of health reform for the Shumlin administration

And Lunge says she worked hand-in-glove with Gruber and his team for the duration of the contract. The Gruber controversy spurred numerous records requests for communications between him and the administration. And Lunge says those emails, first chronicled in a story by the Vermont Press Bureau, provided her with a comprehensive understanding of the work Gruber was doing.

“I think as is illustrated by the thousands of documents and emails we released between Dr. Gruber and the staff, including myself, I feel confident that we’ve gotten our money’s worth in terms of both the amount of work as well as the quality of the work that we received,” Lunge says.

Hoffer says that may be so. But he says it doesn’t mean Gruber or the administration can bypass the statutory requirements governing state contracts.

“It’s not about Gruber per se, it’s about the administration and its ability and willingness to hold personal service contractors to the terms of these contracts,” Hoffer says. “It’s just contract stuff, and the administration needs to do a better job, because they approved payments that I think most people say on first glance, 'this isn’t sufficient.'"

Hoffer, who has subpoena power for state contracts, says he’s in the process of submitting more requests for information to Gruber. Gruber declined comment for this story, as did the three legislators who asked Hoffer to conduct an audit.