'Zombie' Program Cuts Deficit

Saturday, 08 Oct 2011 09:17 AM

 

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They're calling it the zombie in the budget.

It's a long-term care plan the Obama administration has put on hold, fearing it could go bust if actually implemented. Yet while the program exists on paper, monthly premiums the government may never collect count as reducing federal deficits.

Real or not, that's $80 billion over the next 10 years.

The Community Living Assistance Services and Supports program, CLASS for short, may just keep lurching along indefinitely. It would join other peculiar creatures of the federal budget such as "trust funds" that are actually more like IOUs and Medicare cuts that can be counted twice.

"It's a gimmick that produces phantom savings," said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates deficit control..

"That money should have never been counted as deficit reduction because it was supposed to be set aside to pay for benefits," Bixby added. "The fact that they're not actually doing anything with the program sort of compounds the gimmick."

The program was created under President Barack Obama's health care overhaul, and arguably provided much of the 10-year, $143 billion in savings claimed under the law. But now some Capitol Hill aides have dubbed CLASS a "budget zombie."

The administration recently asked Congress to hold off on money for implementing CLASS as it tries to find a way to make it solvent for the long run. The chief financial expert for CLASS left the government, saying the program's staff was abruptly reassigned.

CLASS was a priority of the late Democratic Sen. Edward M. Kennedy of Massachusetts, who envisioned a voluntary, long-term care insurance plan sponsored by the government, without the overhead costs of private insurers, or the rigorous pre-screening they require.

CLASS beneficiaries would pay an affordable monthly premium while they were healthy and working. In exchange, they could collect a modest daily cash benefit if they became disabled. Congress included CLASS in the health care law, specifying it must be self-sustaining.

Kennedy's idea was to give families some financial breathing room. The burden of long-term care is growing. Most families cannot afford to hire a home health aide for a frail elder, let alone pay nursing home bills. Long-term care is usually provided by family members, often a spouse who may also have health problems.

But a central design flaw dogged CLASS from the beginning. Unless large numbers of healthy people willingly sign up during their working years, soaring premiums driven by the needs of disabled beneficiaries would destabilize it, eventually requiring a taxpayer bailout. The main reason the program produced budget savings in its first 10 years was a rule that enrollees pay in for at least five years before collecting benefits.

The chairman of the House subcommittee that oversees money for Health and Human Services says the administration is playing a shell game.

"They've shelved it, but they're keeping it around," said Rep. Denny Rehberg, R-Mont. "The only logical reason I can see is that they need the money — even though there is no money there — to make Obamacare work."

Absolutely not, says the administration.

"We are looking at the CLASS program from every angle," Kathy Greenlee, assistant HHS secretary for aging, blogged recently. "We are doing our due diligence." The administration will soon release a report with recommendations about how to proceed, she added.

Although Greenlee did not give any hints, one option is to go back to Congress for additional legal authority to revise the program.

Meanwhile, supporters of CLASS are getting concerned. Many groups that pushed for the health care law also backed CLASS. They wrote Obama recently, saying he doesn't need any additional authority from Congress to go forward.

"The people who care about this program are just getting angry," said Connie Garner, a former Kennedy aide who is directing a coalition of CLASS supporters.

Don't expect CLASS to go away easily. If the congressional supercommittee tackling the debt decides to recommend repeal, the panel would have to come up with about $80 billion in other cuts — possibly real and painful — to offset the hypothetical savings from CLASS.

"They'll probably ignore it," said Bixby, the deficit hawk. "I think they're not sure what they're dealing with."

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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