Kill the CLASS Act before it hurts taxpayers

On Thursday, an investigative team representing Republicans in both chambers of Congress released a sweeping report detailing how President Barack Obama, his top appointees in the White House, the Department of Health and Human Services and leading congressional Democrats ignored repeated internal warnings about the Community Living Assistance Services and Supports (CLASS) Act. That’s the long-term care entitlement program buried in the 2,000-plus pages of Obamacare. The warning from knowledgeable experts was that the CLASS Act was another government-spawned financial disaster-in-the-making for American taxpayers.

As with so many other milestones along the way to Obamacare, the CLASS Act was the brainchild of the late Sen. Ted Kennedy, D-Mass. The program is similar to Social Security in the sense that participants pay premiums that finance payments to current beneficiaries. Unlike Social Security, however, CLASS is supposed to be voluntary and fully funded by premiums. Having CLASS as a voluntary program certainly made for a more compelling sales pitch. But, as Centers for Medicare and Medicaid Services Chief Actuary Richard Foster warned in a May 2009 email revealed in the report, the idea “doesn’t look workable.” The problem, according to Foster, was that there likely won’t be enough participants to keep the program afloat. Two months later, Foster was even more emphatic: “Thirty-six years of actuarial experience lead me to believe that this program would collapse in short order and require significant federal subsidies to continue.”

As the email trail exposed in the report shows, Foster wasn’t alone in airing such concerns. But Obama and company pressed ahead anyway, just as they did when warned by other experts that giving Solyndra $535 million in federal loan guarantees wasn’t a good idea because the company would likely go bankrupt. Because the CLASS Act would collect five years of premiums before paying out any benefits, Democrats could claim $72 billion in deficit reduction from the program over the Congressional Budget Office’s 10-year budget window, ignoring the fact that it would become a budget buster over time.

Not only does the program represent another ticking entitlement time bomb for taxpayers, it imposes a heavy administrative burden on states and businesses. And, in order to increase enrollment, emails show that the Department of Health and Human Services has contemplated imposing additional mandates on employers. Under Obamacare, Secretary Kathleen Sebelius has wide leeway to impose new requirements, which are expected to be finalized this fall.

Unlike other parts of the national health care law, there’s actually some bipartisan support for repealing the CLASS Act. Senate Budget Committee Chairman Kent Conrad, D-N.D., called it “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.” Though he eventually voted for it, the budget proposal he unveiled this July as part of the bipartisan “Gang of Six,” called for repeal of the CLASS Act. There’s no time to waste, because once the government starts collecting premiums, it will be all but impossible to stop.

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