Huge victory for the GOP and fiscal sanity on the health care front
Statement from Congressman Paul Ryan on the decision by the Obama administration to give up on the CLASS Act program:
“To hide the true cost of their health-care overhaul, the leaders of the Democratic party loaded it with gimmicks and double-counting. One of the most egregious of these gimmicks involved the CLASS Act, a new long-term care program that was scored as an offset against the ten-year, trillion-dollar cost of the Democrats new law. Independent health care experts warned that the CLASS Act program would turn into a classic ‘insurance death spiral.’ Not only would the short-term savings fail to materialize, but the long-term costs would prove catastrophically high. Even Democratic Senator Kent Conrad called the program ‘A Ponzi scheme Bernie Madoff would have been proud of.’
“Today, the Obama Administration finally surrendered to reality: Health and Human Services Secretary Kathleen Sebelius has informed Congressional leaders that she ‘does not see a viable path forward for CLASS implementation at this time.’ The smoke and mirrors that the Democrats employed to sell their health care overhaul are finally falling away, one broken promise at a time. When all of these gimmicks are stripped out, the new law would add hundreds of billions of dollars in red ink over the next decade, as health-care costs send the debt spiraling out of control. Now it is time for Congress to do the responsible thing: Repeal the disastrous new law and replace it with true, patient-centered reforms.”
The Associated Press did a story on the problems of the CLASS Act:
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.
Obama’s own bipartisan debt commission last year recommended major reforms or repeal of CLASS, as did another independent advisory group. Nursing homes and long-term care providers support the program, while private long-term care insurance companies oppose it. CLASS poses a dilemma for the new congressional supercommittee, since it initially reduces the federal deficit until payouts overwhelm premiums collected.
The emails show that the first warning about CLASS came in May 2009, from Richard Foster, head of long range economic forecasts for Medicare. “At first glance this proposal doesn’t look workable,” Foster wrote in an email to other HHS officials, some of whom were working with Congress to get CLASS into the health care law.
Foster said a rough outline of the program would have to enroll more than 230 million people — more than the U.S. workforce — to be financially feasible.
But work on CLASS continued, bolstered by a report for AARP that laid out scenarios for implementing the plan. The AARP study also raised financial concerns, although the seniors’ lobby supports CLASS.
In July, Foster tried again. After reviewing the latest information from Kennedy’s office, he wrote HHS officials: “Thirty-six years of (professional) experience lead me to believe that this program would collapse in short order and require significant federal subsidies to continue.”
Despite all of the warnings concerning the viability of the program, President Barack Obama and the Democrats decided to cook the books instead. Now because of Republican pressure the program was stopped before it became a huge financial burden.