C.L.A.S.S. Is Dismissed And That Is Not Good For Obama Care

In a recent review of Obama care failures, we reported that the CLASS (Community Living Assistance Services and Supports Program) portion of the legislation was possibly in danger of folding since the head actuary in charge of it, along with members of his staff, had been reassigned. At that time, the Health and Human Services Department refused to officially verify the program was having problems.

Well, the suspicions were correct. Various news reports over the past week reported how the program has been deemed a failure, even by the Obama administration. Details include the following:

• Health and Human Services Secretary Kathleen Sebelius officially announced the termination of the program with a letter to Congress on October 14, 2011, concluding "there was not path close to solvency for the CLASS program."
• Included in the letter was the statement: "Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time." In other words, even for the wasteful spending political class, this dog of a program couldn't hunt.
• This part of the legislation was the pet program of the late Senator Ted Kennedy and was intended to allow Americans to purchase long term disability insurance for a low monthly premium.
• The initial target cost of the monthly premiums was hoped to be as low as $150 a month that would eventually pay out $50 a day if long term disability was needed.
• But the program's expected monthly premiums were now expected to be between $200 and $300 a month and could go as high as $3,000 a month in certain situations.
• But this termination should not come as a surprise since it is reported that the Congressional Budget Office stated as early as April, 2009 that "the CLASS program could be subject to considerable financial risk in the future if it was unable to attract a sufficiently healthy group of enrollees." Sort of sounds a lot like the Solyndra fiasco where the Obama administration was told ahead of time that the financials were likely to be shaky at best and the administration still went ahead with this disaster of a program.

Why this is so important is the fact that one of Obama's supposed selling points of Obama Care was that it would reduce the national debt over the first ten years by $125 billion or about $12.5 billion a year. However, shortly after the legislation was passed we found out that the $125 billion surplus cost did not include all of Obama Care's final components.

As reported by the Associated Press, these unaccounted for costs would add an additional cost of about $105 billion over ten years, reducing Obama Care's supposed positive impact to only $20 billion over the first ten years or a mere $2 billion a year.

But things got worse. Given that the legislation screwed up the wording and logic relative to Social Security payments and how they would be calculated in the Obama Care world, it appears that more Americans would be unnecessarily eligible for Federal government support in purchasing insurance, to the tune of about $30 billion a year, wiping out Obama Care's supposedly positive financial impact and now adding to our mountain of national debt.

And now the termination of CLASS only adds to the national debt since the original legislation estimate showed that CLASS would reduce the cost of Obama Care by about $80-90 billion. That positive impact now goes away with the program's cancellation.

The opponents of Obama Care weighed in with opinions and the following quotes:

• "The CLASS Act was a budget gimmick that might enhance the numbers on a Washington bureaucrat's spreadsheet but was destined to fail in the real world." Senate Minority Leader Mitch McConnell.
• "It (CLASS) was a gimmick, it was an outrageous gimmick. It was designed to basically make the score of the CBO (Congressional Budget Office) look good...but none of the serious adults ever felt that this thing was actually a legitimately workable program." Dr. Robert Moffit, Senior Fellow at the Center For Policy Innovation.
• "The cost of Obama Care was masked by the revenues the CLASS Act was supposed to generate for the five years before it began paying out benefits. Obama Care, as of today, is as much as $87 billion more expensive." President Tom Fulton, Judicial Watch.
• "It's stunning to see how quickly the various aspects of the Obama Care law are unraveling before our eyes. It's the shoddiest piece of legislation in modern history." Betsey McCaughey  former lieutenantt governor of New York

It is tough to argue with their points since even the administration is giving up on the effort, at a paper cost of tens of billions of dollars. As a side bar, it also brings into question the Constitutionality of Selebius unilaterally terminating the program. One would have thought that since Congress passed the legislation, they would have to be the ones to terminate even a bad program such as this. Just another fiasco, disaster, chaotic situation spawned off of a very bad piece of legislation.

But things are getting worse for Obama Care beyond CLASS. The Congressional Budget Office originally estimated that 9-10 million Americans would see their employer provided health insurance coverage cancelled, forcing them into government insurance exchanges. However, a recent analysis by the business consulting firm McKenzie, based on a survey of over 1,000 businesses, estimates that 30-50% of these private businesses will terminate their company health insurance plans as a result of Obama Care.

If this happens, this would throw upwards of 78 million Americans into the government health insurance exchanges, seven to eight times as many than were anticipated under the Obama Care's financial analysis. If even half of MacKenzie's estimates comes true, it could up to $500 billion to the cost of Obama Care and the national debt.

Oh, and by the way, there are rumors that the establishment of the government insurance exchanges is way behind schedule, complicated by the recent resignation of the Health and Human Services chief who was supposed to spearhead the effort, Joel Ario.

CLASS is dismissed, the financial model for Obama Care continues to implode, tens of millions of Americans are about to lose their health insurance coverage with no alternative in place to pick up the slack and the biggest disaster of all: the legislation has not and never will address the underlying causes of our nation's high health care costs. That is why the political class supporters of this "shoddiest piece of legislation in modern history" also need to be dismissed.



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