Letter of Support: Repeal the CLASS Act, S. 720 and H.R. 1173

April 20, 2011 J

Dear Senator Thune and Representative Boustany,

On behalf of more than 1.7 million Americans for Prosperity activists in all 50 states, I want to commend you for introducing the Repeal the CLASS Entitlement Act, S. 720 and H.R. 1173 respectively. Your bills would fully repeal the Community Living Assistance Services and Supports (CLASS) Act, an expensive long-term care entitlement program created in ObamaCare. This is one of many important steps towards reversing the president’s disastrous intrusions into our nation’s health care system, and it prevents the administration from adding yet another costly entitlement program to a federal budget that’s already overburdened and beginning to break.

The CLASS Act is a perfect example of ObamaCare’s accounting gimmickry at its worst – claiming savings in the short-term while making promises to future beneficiaries that will add tens of billions dollars to budget deficits in the coming decades. While the nation debated health care reform last year, the non-partisan Congressional Budget Office (CBO) was crying “foul” for exactly this reason. They explained that while official estimates show the new entitlement cutting deficits in its first ten years, this is because the program collects premiums from working Americans for a full five years before paying out any benefits. Funds coming into the program get a five-year head start, but funds going out to pay benefits will quickly overtake them: in the best case scenario the program will begin creating billion-dollar deficits no later than 2030, further deteriorating the nation’s gloomy long-term fiscal outlook.

The CBO also noted several reasons why the program may not work as planned: the program may not be able to attract and enroll a sufficient number of young and healthy workers to support those receiving benefits; employers may opt out or choose not to auto-enroll their employees in the system; and the government will be unable to charge higher premium rates for those with the greatest likelihood of needing expensive long-term care. In short, the program is likely to disproportionately attract only enrollees with the highest costs.

This all makes it more likely that premiums coming in will be vastly overwhelmed by benefit payments going out the door, and taxpayers will be responsible for making up the difference for these large deficits. This is likely what Senate Budget Committee Chairman Ken Conrad (D-ND) had in mind when he called the program “a Ponzi scheme of the first order, the kind of thing Bernie Madoff would be proud of.”

The nation needs market-based solutions to rein in the exploding costs of care for the nation’s disabled and elderly, not more failed government programs that can’t deliver what they promise in the long-run. Americans for Prosperity is proud to support your legislation, I urge your colleagues to support its passage, and I look forward to working with you in the future.

James Valvo
Director of Government Affairs
Americans for Prosperity

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