Welcome to ObamaCare, Part VII: Acting up in CLASS
[img_assist|nid=25197|title=|desc=|link=url|url=http://www.americansforprosperity.org/health-care-entitlements|align=left|width=79|height=100]The flaws in the President’s health care law are starting to cause the takeover to collapse in on itself. In past installments of this series we discussed how Obama’s claim that “if you like your health care plan you can keep it” was misleading and implausible on its face. Now the next benchmark claim of the law – that it wouldn’t increase the budget deficit – is proving equally absurd. We all knew that the takeover’s supporters could only claim that a bill that sweeps millions more people onto the public health rolls wouldn’t run budget deficits by using Washington budget gimmicks and tricks. Last week, the Obama administration finally admitted one of their key gimmicks couldn’t possibly play out as promised and dropped the farce altogether.
Health and Human Services Secretary Kathleen Sebelius sent a letter to Congress admitting that the Community Living Assistance Services and Supports (CLASS) program was not financially feasible and could not be implemented. Sebelius wrote:
For 19 months, experts inside and outside of government have examined how HHS might implement a financially sustainable, voluntary, and self-financed long-term care insurance program … despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.
The CLASS program was only added to the larger bill because it was designed to game the ten-year budget window. The program collected revenues for all ten years of the budget window but only paid out benefits for five years. This allowed CBO to score CLASS as actually creating extra revenue that Democrats used to fund other parts of the public health care expansion. Once the program’s design actually compared ten years of spending and ten years of revenues it was disastrously unaffordable, just like most public health programs.
The CMS Actuary admitted as much during the height of public debate over the scheme, saying:
The new Community Living Assistance Services and Supports (CLASS) insurance program would produce an estimated total net savings of $38 billion through fiscal year 2019. This effect, however, is due to the initial 5-year period during which no benefits would be paid. Over the longer term, expenditures would exceed premium receipts, and there is a very serious risk that the program would become unsustainable as a result of adverse selection by participants.
In other words, liberals in Congress were called out on their scheme and went ahead and did it anyway.
Fortuitously, Senator Judd Gregg (R-N.H.) added an amendment to the health care bill that the “Secretary shall establish all premiums to be paid by enrollees for the year based on an actuarial analysis of the 75-year costs of the program.” This required Sebelius to set premium levels at a prohibitively high level if she wanted to move forward, which would have resulted in no one signing up for the voluntary program. The bill required HHS to certify that the program was actuarially sound over a 75-year window, the same long look we use for other entitlement programs. This, of course, HHS could not do.
The HHS actuary who was tasked with trying to fit the program’s square peg into a round hole, Bob Yee, announced in an email alongside his departure from HHS that “I believe I have made a contribution to CLASS to the best of my ability and hope I haven’t embarrassed the actuarial profession too much.”
The ones who should be embarrassed are President Obama, then-Speaker Pelosi and Senate Leader Harry Reid, who advanced a game of misdirection and obfuscation on the American people. Their signature legislation is falling apart and the hard working taxpayers of this and future generations are going to be left holding the tab. Just like we all always knew they would be.
AFP calls for a complete and thorough investigation of the claims that CLASS wouldn’t explode the budget deficit. The American people deserve to be told who knew what and when.
Welcome to ObamaCare.
Check out previous posts in the “Welcome to ObamaCare” series by clicking below:
• Part I – Overselling on Child Coverage and Preexisting Conditions
• Part II – Obama Taxing Benefits Costs Companies Millions
• Part III – CMS Finally Admits ObamaCare “Cost Savings” Are Phony
• Part IV – Can You Really “Keep Your Plan” If You Like It?
• Part V – Businesses Feeling the Impact, Asking for Waivers
• Part VI – Proposed Regulations “Exchange” a Good Idea for a Bad One