( – promoted by Rob “EaBo Clipper” Eno)
Many speak about a broken Washington, DC, that cries for new leadership. The CLASS Act is living proof of the problems that plague Washington, and why it is time for change in Congress.
The CLASS Act (“Community Living Assistance Services and Supports”) was passed as part of ObamaCare and hailed as a long term care insurance program that would help seniors maintain independence at home and avoid nursing home placement.
At the time, Congressional leaders promised that every senior in the nation would be eligible for this new government run program and that this new benefit would be financed solely by enrollee premiums without federal subsidy. Seniors would pay premiums for 5 years before receiving benefits of up to $50/day to pay for homemaker and other services. In addition, low income enrollees would pay a premium of only $5/month, and be subsidized by those paying full premiums.
If it sounded too good to be true, it was! Even before passed into law, Richard Foster, Chief Actuary of the Center for Medicaid and Medicare Services, reviewed CLASS for financial solvency.
In a letter issued to Congress on January 8, 2010 (2 ½ months before ObamaCare became law), Mr. Foster stated that CLASS faced a “significant risk of failure”. He predicted that by 2025, benefit payments would exceed premium receipts, and CLASS would experience an “insurance death spiral” – premiums would have to increase at such a high rate to pay for obligated benefits, that voluntary enrollment would decline and CLASS would fail.
So from its inception, CLASS was projected to become insolvent, and those paying premiums would be at great risk of losing everything they paid in. (Just imagine the tirades and congressional investigations that would take place if a private insurance company attempted to sell insolvent policies to seniors!)
And of course once the program went broke there is no doubt that the taxpayers would have been on the hook to pay billions to bail out what essentially would be a new entitlement.
So with all of its problems why was CLASS included as part of ObamaCare? At the time Speaker Pelosi and supporters like John Tierney were desperate to get ObamaCare enacted, and they somehow needed to show that passage of Obama Care would reduce the deficit.
Here’s how CLASS played a role. For the first 5 years of CLASS, only premiums would be collected and no benefits paid. That $38 billion collected in premiums allowed the Congressional Budget Office (CBO) to “score” ObamaCare as creating a surplus rather that a deficit.
What’s worse is that CBO doubled counted the $38B, first as Medicare “savings” that reduced the deficit, and then again as $38B available to pay future CLASS benefits. Only in Washington is money routinely counted twice – but every American knows you can’t use the same money twice, once to pay the mortgage and again to pay the car payment!
On October 14, 2011 after spending a small fortune to set up a CLASS office and conduct extensive analysis, President Obama’s HHS Secretary Kathleen Sebelius told Congress what everyone knew in January, 2010, namely that HHS could not “see a viable path forward for CLASS”. In addition, the Congressional Research Service informed Congress that if CLASS was not repealed, it could expose the government to legal liability. CLASS was officially dead, or so one would think.
Last week the House took up H.R. 1173 to repeal CLASS. It was disappointing to see that our Congressman, John Tierney, voted to go forward with CLASS despite the conclusive evidence that seniors would lose paid premiums and CLASS would need a government bailout at great cost to taxpayers. Even more remarkable when one considers that Rep. Tierney serves as a ranking member of the House Oversight Committee.
With Medicare and Social Security headed towards insolvency, and the country just about broke, it is mind boggling that anyone would be advocating for a new entitlement program that even the Obama Administration says we can’t afford and will not work. But the story isn’t over. H.R. 1173 now heads to the Senate but Sen. Reid will never let CLASS repeal come up for a vote. Why? Because the President must be re-elected at any cost, and repeal of CLASS could start the unwinding of ObamaCare, the President’s signature legislation.
I am a strong advocate of Home Care, and was named legislator of the year by the Home Care Association of Massachusetts when I served in the State Senate.
However, this is not a really a story about CLASS, but about Washington, and its failed priorities and programs, the use of financial slight-of-hand to justify and promise massive entitlement programs we just can’t afford, and making re-election of the President more important than protecting our vulnerable seniors and the American taxpayer.
Clearly our seniors and the American people deserve better. We can start by electing leaders who will be honest, not use financial gimmickry to justify programs, and work to put our nation back on solid financial footing. When you see John Tierney, ask him why he is supporting CLASS. The voters deserve an answer.