Obama's administration has eliminated one of the Affordable Care Act's key new entitlement programs, saying that the Community Living Assistance Services (CLASS) Act which would have provided a basic lifetime benefit of a least $50 a day in the event of illness or disability, and was supposed to help reduce the federal budget by $86 billion over the coming decade, was simply "unworkable".
This is the first time the administration has given up on a major piece of Obama's signature legislative achievement. From day one, the program has been persistently criticized for its unfeasibility. Various members of the Republican party have said the administration's decision is proof that the law is unsustainable and faulty. Every presidential candidate of that party had vowed to repeal the law.
The office in charge of creating this insurance program for long-term care had already been closed down by the Department of Health and Human Services last month.
This decision now complicates the planned reduction in the federal deficit. It was supposed to reduce the deficit by $86 billion over the coming decade. According to the Congressional Budget Office, the health care law will reduce the deficit by $124 billion between 2012 and 2021.
The Wall Street journal today wrote that this move is an "overdue admission that ObamaCare's claims of deficit reduction were always an illusion."
The CLASS Act would have provided at least $50 per day in benefits for life for eligible patients in event or disability or illness - it was to be utilized even for non-medical needs, such as making a home wheelchair friendly, or hiring a helper. The voluntary program was planned to be open to all Americans in employment.
The problem was how the plan should be financed. The intention was to pay for it entirely out of premiums participants had paid in. However, a package that could do that would have to have such expensive premiums that it is doubtful anybody would sign up. Unless CLASS had a healthy percentage of well off and healthy people as participants, premiums would have been higher still - the whole thing seemed at risk of collapsing before it even started. The administration has spent the last year and-a-half trying to find ways of resolving this problem - unsuccessfully.
Assistant Secretary for aging at the Department of Health and Human Services (HHS), said yesterday:
"At this point, we do not have a viable path forward to
implement the CLASS Act."
Last year the chief actuary for the Centers for Medicare and Medicaid Services had already warned that the program was faulty and at considerable risk of failure, Rep. Phil Gingrey said yesterday.
Yesterday, Gingrey said:
"I feel justified and vindicated. The bottom line is. . . . As people start to understand this bill, you are going to see more and more of a domino effect."
HHS's own analysts warned the Democrats all the way through that CLASS was a fiscal time bomb.
HHS Secretary, Kathleen Sebelius, wrote in a letter yesterday:
"For 19 months, experts inside and outside of government have examined how HHS might implement a financially sustainable, voluntary, and self-financed long-term care insurance program under the law that meets the needs of those seeking protection for the near term and those planning for the future. The work has been groundbreaking in many ways and has taught us a great deal, much of which is captured in the attached report. But despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time. . . .
... The challenge that CLASS was created to address is not going away. By 2020, we know that an estimated 15 million Americans will need some kind of long-term care and fewer than three percent have a long-term care policy. These Americans are our family, our friends and our neighbors. If they are to live productive and independent lives, we need to make sure that they have access to the long-term care supports that make that possible.
We also know that left unaddressed, long-term care costs to taxpayers will only increase. Without insurance coverage or the personal wealth to pay large sums in their later years, more Americans with disabilities will rely on Medicaid services once their assets are depleted, putting further strain on State and Federal budgets."
Written by Christian Nordqvist