ObamaCare’s CLASS Act

File under: we passed it, now we get to find out what's in it. While bad news continues to strike the Obama Administration like sunlight on a defunct solar panel factory, it bears remembering that ObamaCare is barely online yet. ObamaCare emerged from about as chaotic a legislative process as it is possible to imagine. No one really knows yet what is in it. But we are finding out. From the AP:

Even as leading Democrats offered assurances to the contrary, government experts repeatedly warned that a new long-term care insurance plan could go belly up, saddling taxpayers with another underfunded benefit program, according to emails disclosed by congressional investigators…

A longstanding priority of the late Sen. Edward M. Kennedy, D-Mass., the Community Living Assistance Services and Supports program, or CLASS, was spliced into the health care law despite nagging budget worries…

CLASS was intended as voluntary long-term care insurance plan, supported by premiums, not taxpayer dollars. Workers would pay an affordable sum of around $100 a month or less. In exchange, they would receive a modest daily cash benefit averaging no less than $50 if they become disabled later in life. Beneficiaries could use the money for services to help them stay at home, or to help with nursing home bills. The Health and Human Services Department is supposed to set the final premiums and benefit levels in the coming months.

But the program is on a collision course with powerful demographic and economic forces. How to pay the exorbitant cost of long-term care remains a major unmet need for an aging society. On the other hand, many economic experts believe the government has already promised seniors more than it can deliver, and now is not the time to launch another program likely to need a taxpayer bailout or new mandates.

Everyone could see that CLASS was unworkable. So why did it make it into ObamaCare? Meagan McArdle is on the case.

From the point of view of someone who is primarily concerned with the Congressional Budget Office's 10-year scoring window, it was great. In the first decade of its existence, the program collects a lot of premiums, but doesn't pay a lot of benefits, so it looks like a fiscal gold mine. It's only in later years, when the beneficiaries start demanding their long-term care, that the problems begin.

It seems like it might have been wiser to skip it. But if they had, ObamaCare wouldn't have had much deficit reduction; the last score of CLASS that I'm aware of put the net deficit reduction at $72 billion. CBO's final score of ObamaCare said it would reduce the deficit by $118 billion over the same period. Without CLASS, the deficit reduction would have been less than half the figure they eventually touted. Somehow, $46 billion of deficit reduction on a nearly $1 trillion bill doesn't sound too impressive, does it?

So let's sum this up, shall we? The Administration was warned, repeatedly and by a lot of experts, that this program was a really bad idea. It ignored the warnings. Why? It needed to make ObamaCare look fiscally responsible. This was an outright con job. CLASS was the very opposite of fiscally responsible, as policy.

So the Administration ignored warnings and went with a bad policy for reasons of political strategy. Do I detect a pattern here? Since he announced his jobs bill, President Obama's approval ratings have continued their decline. His personal approval is now in negative territory for the first time in the CBS/NYTimes poll. Barack Obama isn't just a con artist. He is a really bad one.

Comments

[Donald Pay]

The problem is you're not describing the dire situation people and state and federal governments face right now regarding long-term care. This is really nothing new. Back in the 1990s it got so bad that the State of South Dakota placed a moratorium on nursing home construction because the costs of nursing care. It's interesting that you single out this program that actually requires some payments into the program. Right now it's all on the taxpayer.

[Donald Pay]

http://legis.state.sd.us/sessions/2009/notes/Continuum_of_Care_Task_Force_Report.pdf

This link will help you get up to speed on this issue in South Dakota, which has been dealing with this issue for decades. You will notice that the Task Force had no recommendation for funding for long-term care changes that were recommended. It's great to point out problems with the CLASS act, KB, but what's your solution?

[duggersd]

I think, Donald, it does not matter what KB's solution is. What is important is this law was put into effect without really vetting it or by lying about what will happen. As it is, we have a new program that is going to inevitably add money to the deficit problem. If you are going to propose a solution, the point is that it should solve problem. This only exasperates the problem.

[Bill Fleming]

The answer is going to be to raise taxes, of course.

[Ken Blanchard]

Donald: if the AP story is right, then CLASS is not a viable program. The fact that I don't have a solution doesn't make it any more viable. The point here is that the Administration knew in advance that it was unworkable but kept it in anyway. They did so in order to make a fraudulent claim about ObamaCare's finances. If George W. pulled a trick like that you'd be all over him for it.

[Bill Fleming]

...again, KB, you fiddle around at the fringes while your party turns its nose up at $4 trillion workable solutions, causing folks to wonder why the GOP won't take yes for an answer. Pretty funny.

[Donald Pay]

Yeah, just what I thought, KB. You don't have squat for solutions, but you like to whine and bellyache plenty.

You might start by digesting what the South Dakota Task Force suggested. You got any problems there? If so, what are they?

The one problem I saw was that SD Task Force did not have a funding mechanism. Still, for a state to take this on, especially one like South Dakota which depends on federal subsidies to stay afloat, says a lot about the need.

CLASS, at least, requires some contribution from participants, whereas right now it falls completely to the taxpayer. That's a real problem for a state like South Dakota. The program is entirely voluntary right now. The voluntary part, which was meant to appeal to Republicans, is the prime problem.

[Ken Blanchard]

Bill: putting bad policy into a chaotic healthcare bill in order to make the bill appear to be more fiscally responsible than it is isn't "the fringes". Its the warp and woof, to exploit half of your mixed metaphor. The other issue you seem to want to substitute for discussion of this one is hardly relevant. The article I cited was from AP, not exactly a Republican organ.

Donald: again, the fact that CLASS "requires some contribution from participants" doesn't save the policy if the contributions are very unlikely to support the program. I wasn't writing about the problem of long term care which, I completely agree, is a serious problem. I was writing about a big problem with a particular part of ObamaCare that the Administration was warned about. It ignored the warnings. Pointing that out is not "whining". It is criticism.

I note that both my cherished interlocutors are striving valiantly to change the subject. I don't blame them.

[Donald Pay]

So, what's your solution? Many of your posts call every plan Obama comes up with a "con," yet you don't have the smarts or the guts to state any ideas on anything. Quite frankly there are a lot of Obama's ideas I don't like because they are just warmed over Republicanism, but at least he is trying to fix long-standing problems that Republicans have caused or ignored for years. Do you have any ideas that would actually improve life here in the USA, or are you all about playing the political game only?

When I was a political activist in South Dakota we criticized a lot of what the Republican power structure was doing, but we put forth ideas and took them to the Legislature, or to city councils, or petitioned them to the ballot. Do you ever do anything to improve life for others other than yourself or is whining and bellyaching the extent of your efforts?

[Ken Blanchard]

Donald: I have in fact offered solutions. For Social Security, adjust pay outs to revenues. As long as its a paygo program, that is the obvious solution. It wouldn't be too painful. Medicare is in much worse shape. The Ryan plan is the only thing anyone has put forward that would actually address the problem. I know you hate it but let's face it, you're going to hate any real reform. At any rate, the President's recent "deficit reduction" proposal completely ignores entitlement reform. He has nothing to offer. He is never going to have anything to offer.

[Bill Fleming]

"For Social Security, adjust pay outs to revenues." That would be AFTER the $2.7 trillion owed to the SS trust fund was paid back, right, KB? If so, it might not be too bad of an idea. It might keep people from stealing from the piggy bank.

[Bill Fleming]

"At any rate, the President's recent "deficit reduction" proposal completely ignores entitlement reform. He has nothing to offer. He is never going to have anything to offer."

I predict, if he gets re-elected, he will offer Medicare for everyone. Universal health. Which is what should have been offered in the first place.