CLASS Canceled

Dear Readers: I brought the Community Living Assistance Services and Supports program, or CLASS, to your attention on September 28^th. This was part of ObamaCare. In theory it would provide long term cash benefits for disabled Americans who voluntarily enrolled in the program. It would be entirely funded by contributions rather than taxpayer dollars. There was never any reason to believe that this would work. However, the projected initial contributions to CLASS made it look like ObamaCare was cheaper than it really was. So the Democrats ignored fiscal reality and stuffed it into the ObamaCare stuff sack.

Apparently the Obama Administration is reading SDP, because they finally admitted the truth about CLASS. They killed it. From the Washington Post:

The Obama administration cut a major planned benefit from the 2010 health-care law on Friday, announcing that a program to offer Americans insurance for long-term care was simply unworkable.

Although the program had been dogged from the start by doubts about its feasibility, its elimination marks the first time the administration has backed away from a key piece of President Obama's signature legislative achievement.

Of course, that has some uncomfortable fiscal consequences.

Because the insurance program had been projected to reduce the federal deficit by $86 billion over the next 10 years, terminating it complicates the nation's budget picture. It is now estimated that the health-care law will cut the deficit by $124 billion from 2012 to 2021, according to the Congressional Budget Office.

Okay, so maybe it wasn't this blog that the Administration was reading. From Yuval Levin at NRO's The Corner:

Just about every conservative critic of Obamacare pointed to the irrational design of the CLASS Act before the legislation's enactment. In fact, the administration's own CMS actuary said it would never work. He was ignored by his employers not because they disagreed with him, but because they needed to pretend their legislation would reduce the deficit.

The CBO's scoring methodology could be manipulated to accept a lot of implausible assumptions, but even with those the legislation needed help, and by designing the CLASS Act to start collecting premiums five years before it would start paying benefits (and counting those premiums as deficit reduction even though they would eventually need to be paid out in benefits) they were able to make the program seem to be in the black by $70 billion in its first ten years, which accounted for about half of the overall "deficit reduction" the Democrats claimed.

In other words, the inclusion of CLASS in ObamaCare was an act of fraud. As I pointed out in another post, the Accountable Care Organizations section of the Affordable Care Act is also looking like a failure. The ACO was the other major cost-cutting program, at least on paper.

The only question now is whether there will be enough of ObamaCare left for the Supreme Court to review.

Comments

[Donald Pay]

As I said in your previous post, the problem with CLASS was its voluntary nature. Fund it through mandatory payroll deductions and you solve the problem.

Most of us will need long-term care at some point, and few of us are willing to part with a few bucks now to assure long-term care in a natural setting. So, we end up paying premium prices at assisted living centers. Right now it's all on the taxpayer. As I also pointed out, KB, you have no solution to this problem.

[Bill Fleming]

Great picture.

[duggersd]

Yes, Donald, the problem was its voluntary nature. We could solve the problem by forcing people to purchase this coverage. And collecting it for a few years without paying anything is a stroke of genius. Maybe we can solve a few other problems by mandating some things. We could improve everyone's health if we mandated everybody had to exercise 45 minutes three times per week. And to do this, we mandate people purchase gym memberships. We could also mandate that restaurants cannot sell any meal with more than 5 grams of fat and less than 800 calories. And while we are at it, we could require each family to hire a dietician whose responsibility would be to see to it the family is eating a nutritious, calory smart meal. And we could solve a few other problems outside of health care. We could require everyone to purchase a car that gets at least 35 MPG. And we could mandate everyone keep the thermostat under 68 degrees in the winter and if air conditioning is allowed, it cannot be below 85 degrees. Yes, if we mandate things we can solve all kinds of problems, can't we?

[Ken Blanchard]

Bill: thanks.

Dugger: you posted what I thought as I read Donald's comment.

Donald: you are right again. I am hardly a policy wonk and I have no proposal for long term care insurance. Neither did I lie about having one, or produce one for purposes of fraud.

Yes, long term care is a serious issue that ought to be addressed. The dismissal of CLASS shows that the Democrats weren't seriously addressing it either. I am not President. Obama is.

[George Mason]

KB; One thought you may want to ponder. Look at the %GDP consumed by healthcare prior to the government takeover of geriatric care. The costs and pricing of medical care have been skewed ever since. Add into that the number of hours dedicated to government paperwork. The reason the future cost estimates for Medicare and Medicaid at their inception were so far off is because they were based upon the free market model they replaced. When government interferes in a business the costs always rise. The reduction of government interference will cause costs to fall.

[Ken Blanchard]

George: I am with you on all counts.