The Obama administration announced last Friday that it would end implementation of one of the signature components of the Affordable Care Act (Obamacare or ACA). The Community Living Assistance Standards and Supports (CLASS) Act, a program that was designed to ensure long-term care, was required by law to remain financially self-sustaining. Utilizing the statute’s heroic assumption that healthy people would sign up for this voluntary program, the Congressional Budget Office (CBO) scored the program as reducing the deficit by over $80 billion-nearly half of the Affordable Care Act’s supposed deficit reduction numbers. However, the Health and Human Services Department (HHS) was unable to devise a means of implementation that could both attract healthy participants and pay the minimum level of benefits, leaving the program financially unsound.
Despite the announcement from HHS Secretary Kathleen Sebelius that the administration would halt implementation of the program, Thomas Miller of the American Enterprise Institute writes that Congress should formally repeal the CLASS Act and use this opportunity to take another look at the Obamacare’s fiscal soundness.
1. The actual legal authority for the program remains on the books without further action. One should never leave a partly loaded gun on the table, even if most of the chambers are empty or just house blanks. The CLASS provisions in the Affordable Care Act should be formally repealed, but not before several hearings and/or investigations to drag its administration enablers before public scrutiny on the record. The program is emblematic of the only slightly less sustainable assumptions behind the rest of Obamacare, and a full autopsy could provide an excellent tutorial for voters and officeholders.
2. The Congressional Budget Office has informally signaled that abandonment of the CLASS program will not have any budgetary costs, because it turns out that its advance premiums cannot be collected in any legally enforceable manner given the statute’s requirements for 75-year solvency. However, Republican congressional leaders should insist on an updated budgetary estimate of the “net” effects of the ACA over the next ten years without the previously assumed revenue gains from the CLASS program premiums. CBO is not ordinarily obligated to update its overall budgetary baseline until this winter as part of the next annual White House budget plan for fiscal year 2012, but a request from House Budget chairman Paul Ryan for an earlier letter estimate in this regard would be difficult to ignore. Its findings would further tarnish the questionable basis for the earlier budgetary savings claims made in 2009 and 2010 for Obamacare.
Miller also recommends that Congress use this opportunity to target some of the more unpopular and unworkable aspects of the ACA, including the Independent Payment Advisory Board (IPAB).
The smoke-and-mirrors accounting behind the ACA is quickly beginning to show. Considering the legislation’s uncertain future, the North Carolina legislature should do its best to refrain from implementing aspects of the law, including the state healthcare exchange.
Class Act was never a “signature component” of Obamacare. It was little more than a canary in the mine. CLASS didn’t seem intended to work in actuarial terms but it did highlight a huge issue that will catch up with boomers, Republican or Democratic, over the next few years.
+++ In that sense it was a big success because it made a few more Americans think about their own futures…something Congress/Senate almost totally feared to mention before Obamacare.