Obamacare Foes Rejoice Over CLASS Act Demise

Sunday, 16 Oct 2011 12:04 PM

By David A. Patten

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President Barack Obama’s signature healthcare reform suffered a major setback Friday when the administration pulled the plug on the assisted-living CLASS insurance program, after effectively admitting it was a boondoggle waiting to happen.

obamacare, class, act,The administration dumped the news that it would jettison the major Obamacare entitlement late Friday, as journalists around the country were powering down their computers for the weekend.

“It’s stunning to see how quickly the various aspects of the Obama health law are unraveling before our eyes. It’s the shoddiest piece of legislation in modern history,” Obamacare opponent Betsy McCaughey, the former lieutenant governor of New York, told Newsmax in reaction to the news.

McCaughey predicted that the administration will ultimately have to admit that other provisions of the massive legislation, which many members of Congress admitted they voted on before reading, are unworkable.

Health and Human Services Secretary Kathleen Sebelius informed Congress by letter Friday that there was no path close to solvency for the CLASS program.

“Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time,” Sebelius wrote.

Known as the Community Living Assistance Services and Supports program, CLASS was a pet program championed by the late liberal lion Sen. Edward M. Kennedy. It was intended to allow citizens to purchase insurance at any point during their careers for a low monthly premium, so they could collect an additional source of income if they were later disabled. Initially, premiums were expected to be as low as $150 per month, in return for a payout of $50 per day.

But the estimated premiums soon soared to between $235 and $391, and could have reached as high as $3,000 under some models.

As early as April 2009, the CBO had warned, “The CLASS program could be subject to considerable financial risk in the future if it were unable to attract a sufficiently healthy group of enrollees.” Conservatives have said the program’s shortcomings were obvious all along, and suggest it was only included in the Patient Protection and Affordable Care Act to help the administration receive a better financial score from the Congressional Budget Office (CBO).

Left unexplained: Why health people voluntarily would enroll in a program with a substantial monthly premium in return for benefits they might never be eligible to receive.

“The CLASS Act was a budget gimmick that might enhance the numbers on a Washington bureaucrat’s spreadsheet but was destined to fail in the real world,” Senate Republican Leader Mitch McConnell of Kentucky said, according to the Washington Post.

Dr. Robert E. Moffit, Senior Fellow at the Center for Policy Innovation at The Heritage Foundation, told Newsmax on Friday evening: “It was a gimmick, it was an outrageous gimmick. It was designed to basically make the score of the CBO look good . . . But none of the serious adults ever felt that this thing was actually a legitimately workable program.”

Because CLASS premiums would have been collected in advance, its presence in the omnibus healthcare-reform bill allowed the administration to reduce its cost by $80 billion. Politico.com called Friday’s decision to nix the CLASS entitlement “a stunning end to the financially troubled long-term care insurance program and a major setback to the healthcare reform law.”

Foes of Obamacare rejoiced when the news broke, saying Obamacare is imploding. They cited:

  • The thousands of waivers the administration has granted to states, unions, and companies, freeing them from its requirements
  • The Senate repeal in February of the 1099 provision in the bill that would require companies to fill out IRS paperwork every time they purchased $600 worth of goods from any vendor
  • The House vote Thursday to block any public expenditures of taxpayer dollars on abortion-related services via taxpayer-subsidized health policies
  • Growing whispers that the establishment of federal health-insurance exchanges are so far behind schedule they may not be ready in time when the full program takes effect in 2014
  • The virtual certainty that the U.S. Supreme Court will rule on the constitutionality of the Act’s linchpin individual-mandate provision in June of 2012, on the eve of the presidential election.
When Obamacare foes learned the CLASS entitlement would be tossed, they rejoiced that the truth about the actual price of the healthcare reform to taxpayers is finally emerging.

“The cost of Obamacare was masked by the revenues the CLASS Act was supposed to generate for the five years before it began paying out benefits,” observed Judicial Watch President Tom Fitton in an email to Newsmax. “Obamacare, as of today, is as much $87 billion more expensive.

“It is also not immediately clear to me that Secretary Sibelius has the legal authority to end the program on her own. It is one more good reason to repeal all of Obamacare — or at least place it completely on hold until it constitutional and other actuarial time bombs are honestly disclosed and handled.

“All of this shows that Obamacare was designed and legislated with about as much honesty and care as might be done in a Third World kleptocracy,” the chief of the independent watchdog organization stated. “And we can see it is now being administered in similarly corrupt fashion.”

Moffit tells Newsmax the CBO will now have to re-score the economic viability of the Patient Protection and Affordable Care Act. He adds the loss of the $80 billion offset will put the CBO under tremendous pressure to score the remainder of the bill more realistically.

Analysts have criticized the CBO for grossly underestimating the number of employers who will get out from under the costly health-insurance benefit by simply dropping their policies and dumping workers onto the government-subsidized insurance exchanges that are underwritten by taxpayers.

The CBO has estimated 9 to 10 million employees will see their employers drop their coverage.

But after conducting a survey of over 1,000 businesses, the private McKenzie Company consultancy estimated a whopping 30 to 50 percent of employers would opt to drop coverage.

“We’re talking up to 78 million people,” Moffit says. “You’re talking about costs that you cannot even imagine.”

Moffit projects the swelling numbers shifting to the exchanges will drive up the federal deficit by at least $1 trillion.

“The public relations problem that Washington has is really quite enormous,” he adds. “You’re going to have higher healthcare spending. You’re going to have higher premiums, you’re going to have bigger taxpayer obligations than anybody ever imagined.”

Even without CLASS premiums, however, the administration maintains that ObamaCare will reduce the deficit by $120 billion.

“Among adults, let’s be serious about it,” Moffit says. “Among adults — who really believes this?”

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