Democratic senator Tom Harkin of Iowa may have inadvertently revealed why President Obama has pledged to veto efforts by Congress to repeal a part of Obamacare that already has failed — the long-term-care entitlement program known as the CLASS Act.
“The problem with CLASS is that it’s voluntary,” Senator Harkin said on Tuesday.
In the liberal mind, the program would be fine if we were forced to pay into its long-term-care program. The president is determined to keep CLASS on the books, apparently hoping that the Supreme Court will declare the individual mandate constitutional, requiring us to purchase health insurance. If it does, then it would be only a small step to a new mandate for long-term care.
There is the minor concern about our freedom, and our ability to spend our own personal after-tax money as we please. But that shouldn’t get in the way of the Obama administration’s determination to turn America into an entitlement state.
Speaker John Boehner has scheduled a vote in the House on Wednesday to repeal the CLASS Act (for Community Living Assistance Services and Supports), and it is expected to pass easily, likely with some support from Democrats.
Representative Charles Boustany (R., La.), a physician, is the lead sponsor of H.R. 1173, which would strike the CLASS provision from the health-overhaul law. Senator John Thune (R., S.D.), chairman of the Republican Policy Committee, is pushing the companion measure in the Senate.
Senate Finance Chairman Max Baucus (D., Mont.) said, “I don’t know how it’s going to come up over here, but [CLASS] does have major long-term financial problems.”
You think? During the 2009 debate over Obamacare, Senator Kent Conrad (D., N.D.), chairman of the Senate Budget Committee, said the CLASS Act is “a Ponzi scheme of the first order, the kind of thing Bernie Madoff would be proud of.”
The Obama administration concluded in October that it saw “no viable path forward” to implementing CLASS. Since participation is voluntary, it could not figure out a way to guarantee that the program would be fiscally sound for 75 years without taxpayer bailouts, a requirement that former senator Judd Gregg (R., N.H.) managed to get into the health law.
The news of the program’s demise was a slap in the face to CLASS advocates, who knew it was in trouble but were surprised that the administration gave the program a death certificate. To appease them, Mr. Obama vowed to veto any CLASS repeal legislation.
A recent article lamenting the failure of the program inadvertently admitted the core problem. Howard Gleckman of the Urban Institute wrote in the journal Health Affairs: “The law allowed low-income people to purchase coverage for just $5 a month. That meant that many enrollees could pay just $300 over five years and receive at least $18,000 a year in benefits for the rest of their lives.”
CLASS was a fiscal time bomb. It’s clear the program’s main initial function was to pump up Obamacare’s financing, since it would have collected premiums for five years before paying out a penny in benefits. As a result, the Congressional Budget Office estimated that it would reduce budget deficits by $81 billion over the next decade.
But the payouts would soon bleed red ink. The new entitlement program would have paid $50 a day for long-term-care services for anyone who had paid premiums for five years. It was inevitable that the program would attract older, sicker people, sending CLASS into a death spiral.
Budget expert Jim Capretta concludes: “There was never any shred of evidence that CLASS could ever be made sustainable. Not before enactment, and not since. Indeed, any fair reading of the analyses that were done on the concept prior to its passage would conclude that CLASS was hopeless. And it wasn’t a close call.
“CLASS’s enactment . . . was a deliberate and cynical ploy to put a phony veneer of fiscal restraint on top of a massive tax-and-spend program,” Capretta writes.
In light of the administration’s decision to pull the plug on CLASS, the CBO released another estimate of the cost of repealing CLASS in December — showing repeal would have zero budgetary impact.
Senator Harkin, chairman of the Health, Education, Labor, and Pensions Committee, said he was “neither here nor there” on repealing the program. “It’s not going to be implemented,” Harkin said in an interview. “But we need something like it. It’s causing a lot of families a lot of financial problems. The problem with CLASS is that it’s voluntary.”
That is why, in the defense of freedom, it must be repealed. Tom Miller of the American Enterprise Institute rightly advises that Congress “should never leave a partly loaded gun on the table.”