October 17 2011
Lessons from CLASS's Failure
Carrie L. Lukas
One ObamaCare initiative has been repealed—or rather, it has collapsed under the weight of it's own ill-logical structure.
The Administration finally acknowledged on Friday afternoon that CLASS (the Community Living Assistance Services and Support Act), the program that would have provided the eldery long-term care insurance, has to be shut down. The chief Medicare and Medicaid actuary had long warned that this program was doomed to fiscal ruin (enrollment was voluntary, which meant that only those with the highest expected costs would enroll, leading to higher payouts, higher premiums, and what the National Review editors dub the “health-care death spiral”). Actuaries project that the program would beginning running a deficit after less than ten years.
As Yuval Levin explains on The Corner, CLASS's problems are a microcosm of what we can expect from ObamaCare overall. Why then was CLASS alone shut down? “But in the case of the CLASS Act, the Secretary of HHS was required to certify in advance that her actuaries believed it could be sustained, and at the end of the day there was no way around the fact that it couldn’t.”
Whoever inserted that provision into ObamaCare—requiring the certification of sustainability—deserves a serious round of applause. Undoubtedly, if the Administration had been legally able to foist the economically-doomed program upon the American people, it would have done so with gusto. Too bad a similar provision wasn't made for the rest of the entitlement.
Taxpayers should breath a sigh of relief that CLASS was extinguished before it ever got up and running. Ironically, however, the elimination of CLASS means that projections for ObamaCare's deficits—urr, make that deficit reduction—are worse as a result.
That's because ObamaCare sponsors employed standard budgetary gimmicks through CLASS to force CBO to give the legislation a better “score.” Premiums started before benefits kicked in, giving a short-term revenue boost, which made the numbers in CBO's budget window look better.
Anyone familiar with how the legislative process knows this, and therefore views CBO scores with great skepticism. Yet during the ObamaCare debate a media that frankly does knows better pretended that these CBO scores actually reflect the costs of the program, rather than being a meaningless scorecard for how successfully Congressional staff gamed it to disguise the legislation's true costs.
It's not just Democrats who employ these maneuvers. Republicans often make tax cuts last for only seven years, and then allow them to ratchet back up—a future they would rightfully fight against—in order to work the CBO system.
Honest policy analysts and a media that actually wants to report on the true expected impact of a proposal should support CBO reform. CBO shouldn't be forced to pretend that assumptions made by legislation will actually occur. They should provide a range of estimates based on a variety of presumptions to allow the public, and the media, to get a better picture of how programs will play out in reality.
The country is lucky that CLASS has been shelved. Yet it should have never been passed in the first place. Americans should demand better from lawmakers and ask them to repeal other unsustainable programs, and to start with the rest of ObamaCare.
UPDATE: More from the Wall Street Journal and turns out it's Senator Judd Gregg who deserves our applause.