Business Roundtable is an association of chief executive officers of leading U.S. companies working to promote a thriving economy and expanded opportunity for all Americans through sound public policy.
CLASS Act, dumped?
Many in the commentariat referred to last week's afternoon announcement that Health and Human Services would not implement the CLASS Act provisions of the new health-care law as part of the administration's "Friday news dump," i.e., the common White House practice of releasing bad news late and en masse so it gets marginal news coverage during the weekend. But, HHS pulling the CLASS Act is good news!
(The other supposed components of the news dump, as summarized by conservative Town Hall editor Guy Benson, were the announcement of U.S. troops being sent to central Africa to battle the murderous Kingdom of God Lord's Resistance Army rebels, the $1.3 trillion deficit for the 2011 fiscal year -- second highest deficit ever -- and more developments in the Solyndra scandal.)
As we wrote Friday, the decision to pull the CLASS Act, a voluntary long-term care insurance program championed by the late Sen. Edward Kennedy, was the right move because the program was actuarially unsound -- so expensive it could not be maintained -- and would have imposed an "opt-out" mandate on employees that employers would have to administer.
HHS has not completely dropped the idea of the CLASS program, and is still researching for ways it might be implemented to meet the requirements spelled out in the Patient Protection and Affordable Care Act. BRT and other business groups have supported legislation that seeks to repeal the entire provision, because as conceived the program will never be sound and repeal is necessary "in order to protect employees and Americans from losing their wages to fund an entitlement program which will never benefit them."
So what was this supposed bad news that made pulling the plug on the CLASS Act part of the Friday news dump? Simply this: Its withdrawal undermined the entire health care act, and many regard that as unfortunate. Participants in the voluntary long-term care program would have had to pay five years of premiums before becoming eligible for benefits, which is to say, the program was front-loaded to make the health care bill look more fiscally sound than it really is. As Reuters reported: "The Congressional Budget Office had estimated the program would reduce the federal deficit by $70 billion in the program's first decade.However, the CBO also said the program would start to lose money after the first decade or two, once benefit payments exceeded income from premiums."
Sen. Mike Enzi (R-WY), ranking member of the Senate HELP Committee, captured the Republican critique well in his statement Friday:
"The CLASS Act was unsustainable and fiscally unsound from the start and Secretary Sebelius made the right decision not to implement this program,” said Senator Enzi. “While it is important to recognize that the goals of the CLASS Act are still important to the disability community, the program had the potential to wreak havoc across federal health care budgets. After seeing so many unintended consequences that surround the President’s new health care law, this is more evidence that casts suspicion and doubt on the remaining portions of the law. Rather than increasing premiums and eliminating coverage, maybe now Congress can take a stand and work to make health care more affordable."
Well, yes, right! And that's good news! On overwhelming, bipartisan votes, Congress already killed another supposed source of revenue in the original Affordable Care Act, the terrible IRS 1099 filing requirement imposed on businesses making purchases of $600 or more annually from vendors. Now, the CLASS Act has been shelved. The Patient Protection and Affordable Care Act is not sacrosanct. Legislative history now shows that the law can be amended, reformed, realligned, fixed, improved, and worked on. And there's lots more work to do.
- Thomas P. Miller, The Enterprise Blog (AEI), "Let’s bury the CLASS Act cadaver (after a full autopsy)"
- Wall Street Journal, opinion, "ObamaCare Starts to Unravel"
- Yuval Levin, National Review Online, "One Obamacare Disaster Averted, Lots More To Go"
- News release, Joint American Academy of Actuaries and Society of Actuaries CLASS Act Task Force, "Actuaries Agree With HHS Concerns on CLASS Program"
UPDATE: NRO, "CBO Scores CLASS Repeal as Having Zero Fiscal Impact"