Free Markets, Free People

Does the unsustainability of the CLASS act finally doom ObamaCare?

Don’t forget, the CLASS act was one of the budget gimmicks used to supposedly show that ObamaCare “bent the cost curve downward”.  Ezra Klein explains:

“CLASS” stands — or stood — for “Community Living Assistance Services and Supports.” The idea was simple, or seemed to be: a voluntary insurance program that would cover home health-care options for adults who become disabled. It was Sen. Ted Kennedy’s brainchild, but the White House was cool to it in public and hostile in private. “Seems like a recipe for disaster to me,” wrote one aide in a subsequently released e-mail.

The problem with CLASS was well understood. It frontloaded its savings and backloaded its costs. As the Congressional Budget Office wrote (pdf), “the cash flows under the new program would generate budgetary savings (that is, a reduction in net federal outlays) for the 2010-2019 period and for the 10 years following 2019, followed by budgetary costs (an increase in net federal outlays) in subsequent decades.” No mystery there.

Well not exactly.  It was never sold as “unsustainable” because had the truth been told when the bill was passed into law, it would have been clear that this was as much a Ponzi scheme as Social Security, because it relied on those currently paying in to the program to pay for those collecting or using benefits and, probably just as serious, it was a voluntary program.  Two strikes against sustainability. 

Obviously I’m not advocating that it be made mandatory, just explaining why it was destined to fail.   And fail it has.  The director of the program last week announced that the obvious had finally become obvious even to them.  The program was unsustainable and they were closing it down.

The administration announced late Friday it did not see a way to make the long-term care CLASS Act, which was crafted by the late Sen. Edward Kennedy (D-Mass.), pay for itself. But perhaps even more damning is how the White House mishandled the controversy; consumer advocates accused the administration of being disingenuous and gutless.

Republicans are now pushing to have the act repealed and it has reignited the larger hope that repeal of the CLASS act will lead to repeal of ObamaCare in total.

The growing drumbeat for repeal comes after the White House announced that it is against repeal and remains committed to making the program work.

“We do not support repeal,” said White House spokesman Nick Papas. “Repealing the CLASS Act isn’t necessary or productive. What we should be doing is working together to address the long-term care challenges we face in this country.”

Admitting that the CLASS act is unsustainable would naturally open the administration up to questions about the whole of ObamaCare’s sustainability, especially since CLASS was one of its main cost reduction pillars. 

CBO had scored the long-term care program for people with disabilities as raising $86 billion, or 40 percent of the health law’s $210 billion in deficit reduction over 10 years.

And it was all a lie.  I’m not sure what else you call it.  It was a knowing falsehood perpetrated by those who wanted to pass the health care law and were willing to do just about anything and say just about anything to do so.

The failure of the CLASS act calls into question the sustainability of the entire law.  So the White House has grimly held the line of the CLASS act while it has become apparent to everyone else that the act has to go.  And HHS has announced it is closing down the CLASS office.

On the political side, though, reality and party don’t often meet.  But in the case of CLASS some Democrats are seeing the light while others would prefer to keep the all but dead program alive:

Some Democrats on Capitol Hill might vote against repeal because they want to keep CLASS alive and to support the White House. But others who are facing challenging reelection races — including Sens. Claire McCaskill (Mo.), Joe Manchin (W.Va.), Jon Tester (Mont.) and Ben Nelson (Neb.) — might not use political capital to save a costly program that might never be implemented.

Interesting.  The question now is does proving that 40% of the cost savings ObamaCare promise was a sham call into question the validity and sustainability of the entire law?  

It should.

~McQ

Twitter: @McQandO

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5 Responses to Does the unsustainability of the CLASS act finally doom ObamaCare?

  • CLASS was supposed to be the major contributor to saving in ObamaCare, but the OMB scored the repeal as having a $0 effect on the budget.

  • The House should promptly (can they actually do anything promptly?) pass repeal of this section of Obamacare and send it to the Senate where it will languish. And then every day they should mention this fact.
    Frankly, I don’t know why they don’t do more of this. People forget that repetition is important in politics. Everyone thought Newt Gingrich was wasting his time making one minute speeches to an empty chamber for five years.

  • I don’t think the question will be about how to make it sustainable.  Instead, the question will be about how to make it mandatory.
    With the usual cries of, “How can you oppose this and leave old people to die in the streets!”