Fix Health Care Policy

Obamacare at Three Years: One Entitlement Repealed, Two to Go

Tom Williams/CQ Roll Call/Newscom

When the same Congressmen who voted for Obamacare vote to repeal a provision of it, it’s obvious that provision must be totally unworkable on every level. And that’s what happened to the Community Living Assistance Services and Support (CLASS) Act.

Formally repealed in January’s fiscal cliff deal, CLASS was Obamacare’s attempt at creating a new long-term care entitlement that was once referred to by Senator Kent Conrad (D–ND) as “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.” CLASS was one of Obamacare’s most overt failures.

CLASS was supposed to begin in 2011 as a voluntary, government-run long-term care program that was supposed to be fully funded by beneficiaries’ premiums and require no federal tax dollars. Like most government entitlements, this deal sounded too good to be true—and it was.

This concept was so flawed that even the Obama Administration recognized that implementation had to be stopped. A letter to Congress in 2011 from a CLASS administrator warned of extreme adverse selection in the program, stating that “if healthy purchasers are not attracted to the CLASS benefit package, then premiums will increase, which will make it even more unattractive to purchasers who could also obtain policies in the private market. This imbalance in the beneficiary pool would cause the program to quickly collapse.”

Read the rest on The Foundry…

Tags: CLASS Act, entitlements, extreme adverse selection, high costs, ObamaCare, repeal the law

The Slow Dismantling of Obamacare

Things aren’t going so well for Obamacare.

Even Democrats in Congress aren’t huge fans any more. It seems after passing the law and finding out what’s in it, the allure has faded—so much so that Congress actually repealed part of Obamacare in the fiscal cliff deal last week.

That’s right—part of Obamacare has been completely undone. It was the Community Living Assistance Services and Supports (CLASS) Act, essentially a new entitlement program for long-term care. But this new government program for people who end up needing assisted living or other long-term services was poorly designed and bound to fail,  as Heritage’s Alyene Senger explains.

“CLASS was a bad deal for both taxpayers (who would likely have had to bail out the program) and beneficiaries (who would be better served by choosing among private options),” Senger wrote.

The program was so poorly designed that one of its own administrators warned Congress in 2011 that the program could collapse.

Read the rest on The Foundry…

Tags: bad deal, CLASS Act, entitlement, government program, ObamaCare, taxpayers

Fiscal Cliff Deal Undoes Part of Obamacare

Though the government’s entitlement spending is still spiraling out of control, taxpayers have finally caught a break: The recently passed “fiscal cliff” deal included the repeal of one of Obamacare’s worst provisions, the Community Living Assistance Services and Supports (CLASS) Act.

The CLASS Act was a new entitlement program included in Obamacare. CLASS was created as a voluntary, government-run long-term care (LTC) program. It was supposed to be fully funded from the premiums paid by its beneficiaries and require no federal taxpayer dollars.

But the program was so poorly designed—much like the rest of Obamacare—that even the Obama Administration had to admit it wouldn’t work. A letter to Congress in 2011 from a CLASS administrator warned of extreme adverse selection in the program, stating that “if healthy purchasers are not attracted to the CLASS benefit package, then premiums will increase, which will make it even more unattractive to purchasers who could also obtain policies in the private market. This imbalance in the beneficiary pool would cause the program to quickly collapse.”

Many experts warned that the program would require either a mandate to participate or a permanent taxpayer bailout.

Read the rest on The Foundry…

Tags: CLASS Act, deal, fiscal cliff, ObamaCare, poorly designed, taxpayer dollars

Obamacare Is Losing CLASS Fast

It may be only a few days since Congress began its new session, but it has already done some decent work. This week, the House Ways and Means Committee held the markup of H.R. 1173, which would repeal the Community Living Assistance Services and Supports (CLASS) Act.

The CLASS Act is a government-run long-term care insurance program and a major failure of Obamacare. It has been described in a variety of degrading ways, most notably as unsustainable, an insurance death spiral, and a ponzi scheme of the first order.

As Heritage has previously explained:

From its creation, the CLASS Act was completely unsustainable as written into law. Due to the effects of adverse selection, the program would charge high premiums that would deter less risky individuals from participating. Indeed, participating in the CLASS program would only appeal to those in poor health expecting to need long-term care in the future, further escalating premiums.

Thankfully, the inherent policy flaws of the CLASS Act have been recognized, and congressional action is being taken. Representative Charles Boustany (R–LA), a physician and chairman of the House Ways and Means Subcommittee on Oversight, is the sponsor of the repeal bill. In a recent Politico op-ed, he urges Congress to act and warns, “CLASS could return to haunt us if it isn’t fully repealed before October 2012. Legal experts at the Congressional Research Service warn that a federal judge could force [the Administration] to revive CLASS after this key deadline in the law expires.”  (Read the rest on The Foundry…)

Tags: CLASS Act, House Ways and Means, long-term care, repeal Obamacare, unsustainable

House Subcommittee Reveals Obamacare’s Flaws for Taxpayers, Small Business

A recent Gallup poll revealed that 47 percent of Americans—a plurality—support repeal of Obamacare. While the reasons for the law’s unpopularity are limitless, its broken CLASS program and unsuccessful small business tax credit may play a role.

A few weeks ago, the Department of Health and Human Services announced it would halt implementation of the CLASS program, the government-run long-term care program created by the health care law, since it was unsustainable and unworkable. This put CLASS on life support, but since it isn’t dead yet, its repeal is crucial.

Earlier this week, the House Energy and Commerce Health Subcommittee moved legislation by Representative Charles Boustany (R–LA) one step closer to the President’s desk to repeal the CLASS Act.   (Read the rest on The Foundry…)

Tags: CLASS Act, Gallup poll, repeal Obamacare, unsustainable, unworkable

Online Chat on Obamacare and Medicare Reform

Read our “Lunch with Heritage” chat with Health Policy Analyst Kate Nix. The Obama Administration recently said that part of Obamacare, the CLASS Act, would no longer go into effect. Also, in a speech at Heritage yesterday, Paul Ryan mentioned the need to reform Medicare. Join right now as Kate takes your questions about the CLASS Act, what it means for the future of Obamacare, and how Medicare should be reformed. (See the full transcript on The Foundry…)

Tags: CLASS Act, Medicare, ObamaCare, Rep. Paul Ryan

Another Obamacare Failure

On Friday, Secretary of Health and Human Services Kathleen Sebelius admitted that the CLASS program can’t work. After months of insisting that it could meet a 75-year actuarial soundness test and keep with the statutory requirements, Sebelius acknowledged that “despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.”

The CLASS Act was a key provision included to pass Obamacare. It would have established a new, government-run long-term-care insurance program. But it was also used to claim that the health care law was paid for and would help bring down the deficit. From the beginning, Heritage warned that it was poorly designed and was included in the legislation primarily as a budget gimmick.  (Read the rest on The Foundry…)

Tags: actuarially sound, budgeting gimmick, CLASS Act, HHS Secretary Kathleen Sebelius, long-term care insurance

Obamacare’s CLASS Act Collapses; White House Pulls Plug

The Obama Administration notified Congress today that the CLASS Act — Obamacare’s long-term care insurance plan — is flawed, unsustainable, and unable to go forward.

In a letter to Congress, Health and Human Services Secretary Kathleen Sebelius wrote that “Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.” CBS News reports:

The law required the administration to certify that CLASS would remain financially solvent for 75 years before it could be put into place.  (Read the rest on The Foundry…)

Tags: CLASS Act, financially solvent, no viable path, ObamaCare, pull the plug

The Latest Obamacare Implosion

Inefficient programs that don’t solve problems and are passed against the will of the American people seem to be the Obama Administration’s forte. Now their high-minded aspirations of a health care revolution are quickly unraveling as fatal glitches in Obamacare become apparent.

Next up for implosion? The Community Living Assistance Services and Supports Act, otherwise known as the “CLASS Act,” which creates a government-run long term care insurance program too costly to sustain. At a time when entitlement programs in America have spun out of control, liberal proponents of Obamacare were pushing a new one that had no hope of staying afloat. Now, they are trying hide the fact that they were wrong as another bungling layer of Obamacare is exposed.

From its creation, the CLASS Act was completely unsustainable as written into law. The problem? Due to the effects of adverse selection, the program would charge high premiums that would deter less risky individuals from participating. Indeed, participating in the CLASS program would only appeal to those in poor health expecting to need long-term care in the future, further escalating premiums.  (Read the rest on The Foundry…)

Tags: CLASS Act, government-run long-term care, high premiums, insurance program, ObamaCare

Emails Show Liberals Pushed CLASS Act Despite Experts’ Warnings

Liberals in Congress pushed forward with an unsustainable new entitlement program, internal emails show, and dismissed repeated warnings from federal health care experts that it would be an “insurance death spiral,” as one official put it.

The emails, released by congressional investigators, reveal that proponents of the Community Living Assistance Services and Support (CLASS) program pushed to include it in the president’s health care bill despite warnings that it would require either a sizable federal bailout, or another insurance mandate. The program’s advocates publicly insisted, meanwhile, that it would be self-sustaining and completely voluntary.  (Read the rest on The Foundry…)

Tags: CLASS Act, e-mails, ObamaCare, repeal the law, unsustainable program