October 17 2011

ObamaCare: A CLASS in Accounting Tricks

Hadley Heath

Friday the administration announced that CLASS will not be implemented because it’s not fiscally sustainable.  It’s not usually the purview of the executive branch to decide which laws will or won’t be implemented, but a provision in the Affordable Care Act ensured that an analysis of CLASS would have to prove its sustainability before it was put in motion.

IWF’s Carrie Lukas has already written about this embarrassing turn of events for the administration.  “Too bad a similar provision wasn’t made for the rest of [ObamaCare],” she wrote.  I agree with Carrie – the shortcomings of the CLASS program are indicative of the entire Affordable Care Act’s disregard for fiscal reality.

The Affordable Care Act was a hefty mess – more than 2,000 pages.  Many liberals argue that a simpler solution would have been to implement a national single-payer health care system.  But that’s not what they got.  Trust me, conservatives and libertarians weren’t thrilled either with the resulting legislation either.

But back in March 2010, to convince some more budget-conscious Democrats to toe the party line and vote ObamaCare through anyway, advocates relied on the comforting CBO score that deemed the law “deficit neutral.” 

It’s not class warfare, right?  It’s math: So, the basic idea was $500 billion in Medicare cuts + $500 billion in new taxes = $1 trillion needed to spend on the law’s other goodies.

But clearly, ObamaCare was never deficit-neutral, or deficit-reducing (that's laughable).  Just because the CBO says, “This law costs X” doesn’t mean the law’s true costs have all been evaluated.  Also, CBO scores only attempt to estimate a law’s expenditures and revenues for the next ten years.  I’m not calling the CBO a liar – I’m just recognizing the limits with which they must view the law.  The CBO has to score everything based on a set of assumptions about what will happen, and they must rely heavily on what’s in the language of the statute.  Imagine what a headache ObamaCare must’ve been. 

The CLASS Act was meant to provide $86 billion in savings.  As Julian Pecquet from The Hill figures:

CBO had scored the long-term care program for people with disabilities as saving the nation $86 billion in spending over 10 years. That's about 40 percent of the health law's $210 billion in total estimated deficit reduction over the next decade.

Now that it’s not being implemented, we have to ask, where is the administration planning on making up for those lost future savings?  Technically, it's considered "moot" money now, because CLASS's dismissal was an administrative action (which the CBO just considers as part of its baseline).  So, that's $86 billion that's supposed to quietly disappear.

ObamaCare should ultimately be repealed or struck down in its entirety, but if it isn’t, we can blame CLASS, along with other accounting gimmicks and broken promises, as the reasons why its costs will one day be much higher than projected.

But back to Carrie’s suggestion – that ObamaCare needs a provision to ensure its funds are sustainable.  Well… wasn’t this what the individual mandate was for? 

Conservatives and liberals have both recognized that without the individual mandate ObamaCare would go bankrupt.  No part of this law makes economic sense.  That’s why people must be forced to buy into it.  And that’s why no one – not doctors, not patients, not states, not employers – wants to see it further damage our health care system.

Comments
blog comments powered by Disqus