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Republicans are now pushing to have the act repealed and it has reignited the larger hope that repeal of the CLASS act will lead to repeal of ObamaCare in total.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
ObamaCare requirement — how does this provision cut costs?
I’ve been meaning to write about this for some time, but events overcame the ability to do so until now (Okay, I forgot about it).
What you’ll see with this particular provision is just stupid law. Granted, the entire law in which this provision is found is, in my opinion, stupid, but this takes the cake. But it also appears to be a politically motivated provision designed to make Health Savings Accounts (HSA) unattractive. I can’t see any other reason for it. George Scoville has written extensively on it. Here’s what he’s found:
Starting Jan. 1, 2011, you will no longer be able to use your Health Savings Account (HSA) to pay for over the counter (OTC) medications at a pharmacy, supermarket or other retail store without a prescription.
Examples of OTC items that will require a prescription for HSA debit card purchases as of Jan. 1, 2011:
- Acid controllers
- Acne medicine
- Aids for indigestion
- Allergy and sinus medicine
- Anti-diarrhea medicine
- Baby rash ointment
- Cold and flu medicine
- Eye drops
- Feminine anti-fungal or anti-itch products
- Hemorrhoid treatment
- Laxatives or stool softeners
- Lice treatments
- Motion sickness medicines
- Nasal sprays or drops
- Ointments for cuts, burns or rashes
- Pain relievers, such as aspirin or ibuprofen
- Sleep aids
- Stomach remedies
Yes, that’s right, suddenly many things that Americans buy without thinking twice about are made prescription items if you want to use your HSA to pay for them. And those would all be legitimate items for purchase with an HSA account. So ObamaCare introduces a hassle factor. What a great way to get people to drop their HSA for something easier and more hassle free – like mandated insurance, no?
But as usual, the law of unintended consequences drops by to say “hello” (the hassle factor is intended, this, probably not although you’d be hard pressed to figure out why they didn’t think of it):
Doctors at East Louisville Pediatrics PSC in Kentucky say they’re writing as many as 50 prescriptions a day for drugs such as Bayer AG’s aspirin and Pfizer Inc.’s Advil that don’t need a physician’s nod to be purchased off pharmacy shelves.
The trend, triggered by the 2010 health-care law, affects more than 20 million Americans with flexible spending or health savings accounts that let them use pretax dollars for medical needs. A U.S. rule that took effect Jan. 1 taxes purchases of over-the-counter drugs except for insulin unless the patient has a prescription, generating $5 billion through 2019, according to the congressional Joint Committee on Taxation.
Doctors, pharmacists, insurers and drug companies say while it may generate money to help expand coverage for the uninsured, the measure is driving up medical costs and creating unnecessary work. They want it repealed, expecting demand to surge at year’s end, when people have to use up balances in the accounts.
“It’s a complete waste of time,” said Conrad Flick, one of five physicians at Family Medical Associates of Raleigh in North Carolina, in a telephone interview. In many cases, he said, he’ll talk with patients by phone to determine why they want the drug before he feels comfortable writing the prescription. “So I’m spending an extra half-hour or hour of my day doing things that I don’t get paid for,” he said.
Administrative costs from the new provision are growing, said Diane Myers, administrator for the East Louisville practice that has eight doctors and two nurse practitioners who write prescriptions. “I bet we’re spending a minimum of 10 hours a week on these things,”she said.
10 hours a week that could be spent doing important things or, in this case, having a life. 10 hours a week lost writing prescriptions for aspirin, for heaven sake.
This is an “improvement”? This saves money? This is a provision that helps bend the cost curve down?
In an alternate universe maybe.
Your government at work.
~McQ
Twitter: @McQandO