Dead laws tell no more lies, but may reveal larger truths

Sen. Kent Conrad in a hearing on President Obama's FY 2012 Budget Proposal. He has labeled the CLASS Act as "a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of."

Article Highlights

  • Obama administration acknowledges fatal flaws in CLASS Act

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  • CLASS Act provision in #ObamaCare should be formally repealed

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  • CLASS repeal could revive momentum for repealing and replacing most of #ObamaCare

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The Obama Administration has finally bowed to the inevitable and acknowledged that it can't figure out any way to implement its fatally-flawed government program for voluntary, long-term care insurance. Budget Committee Chairman Kent Conrad (D-ND) had labeled the so-called CLASS Act (Community Living Assistance Services and Support), "a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of," when it was first drafted two years ago as part of health reform. But it turns out that not even Madoff would be able to sell it to gullible investors.

Nevertheless, even after the office of the actuary for the Centers for Medicare and Medicaid Services concluded in April 2010 that, "there is a very serious risk that the program would become unsustainable as a result of adverse selection by participants," and almost all independent outside observers questioned its actuarial soundness, the Department of Health and Human Services (HHS) pretended that it could craft a plan to launch CLASS and keep it solvent for 75 years (as required by an amendment to the CLASS provision inserted two years ago by then-Senator Judd Gregg).

"The program is emblematic of the only slightly less sustainable assumptions behind the rest of ObamaCare, and a full autopsy could provide an excellent tutorial for voters and officeholders."--Thomas P. Miller

Finally ending several weeks of rumors and leaks that the HHS office to implement the CLASS program was about to close, Secretary Kathleen Sebelius issued a letter to congressional leaders. "I do not see a viable path forward to CLASS implementation at this time," she wrote. But note that this statement only classified the program as brain dead, without formally pulling the plug and burying it.

Up to now, the primary political reasons for keeping the fiction of implementing the CLASS program alive involved not just maintaining the longtime dream of its primary congressional supporter (the late Senator Edward Kennedy), and like-minded liberal advocates, that it could eventually mutate/metastasize into a larger, permanent entitlement program for all Americans, but that it helped prop up the congressional budgetary scoring of the health reform law. By collecting premiums up front for five years, before paying out initial benefits, CLASS produced the illusion of "scoreable savings" of roughly $70 billion in initial estimates by the Congressional Budget Office the new health law's initial 10-year budget window. (Après FY 2019, le déluge, but who's still counting that far out?)

The temptation on Capitol Hill is for Republicans to just crow briefly that "we told you so," issue a few press releases, hold a hearing or two, and then wait for another low-hanging rotten fruit of ObamaCare to fall off the tree through the forces of economic and political gravity. They should instead think more strategically about this opportunity.

First, the actual legal authority for the program remains on the books without further action. One should never leave a partly loaded gun on the table, even if most of the chambers are empty or just house blanks. The CLASS provisions in the Affordable Care Act should be formally repealed, after more lengthy investigations and public hearings drag its Administration enablers before wider scrutiny on the record. The program is emblematic of the only slightly less sustainable assumptions behind the rest of ObamaCare, and a full autopsy could provide an excellent tutorial for voters and officeholders.

Second, a more aggressive move on Capitol Hill would involve tying formal repeal of the CLASS provisions to several related flaws in the original legislation that have come to light subsequently -- with significant budgetary implications. This could revive momentum for repealing and replacing most, if not all, of the law. ObamaCare opponents need more actual votes on the record in legislative committees and on the floor of both houses of Congress, not just political posturing and throwaway rhetoric.

If would-be opponents of ObamaCare on Capitol Hill simply prefer to hope that the Supreme Court will do all the difficult work of making the health law go away completely next year and don't want to get their own hands too dirty in harnessing public outrage to a House majority and budget deficit leverage in the Senate, voters should remind them of President Lincoln's directive to his hapless Army general George McClellan during the early part of the Civil War, whose caution and overestimation of the strength of enemy units hampered his ability to use a well-trained army at decisive points: "If General McClellan does not want to use the army, I would like to borrow it for a time."

To paraphrase and update the advice of former White House chief of staff Rahm Emanuel, "You never want a serious, slow, and ugly death of just one legislative provision to go to waste."

Thomas P. Miller is a resident fellow at AEI

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About the Author


Thomas P.
  • Thomas Miller is a former senior health economist for the Joint Economic Committee (JEC). He studies health care policy and regulation. A former trial attorney, journalist, and sports broadcaster, Mr. Miller is the co-author of Why ObamaCare Is Wrong For America (HarperCollins 2011) and heads AEI's "Beyond Repeal & Replace" health reform project. He has testified before Congress on issues including the uninsured, health care costs, Medicare prescription drug benefits, health insurance tax credits, genetic information, Social Security, and federal reinsurance of catastrophic events. While at the JEC, he organized a number of hearings that focused on reforms in private health care markets, such as information transparency and consumer-driven health care.
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