In a news dump late last Friday, the Obama administration was finally forced to face reality and admit that the long-term care program known as the CLASS Act, embedded within its signature health care law, was unworkable. Not that this was a surprise to anybody. Critics of the program repeatedly warned during the health care debate that it was fundamentally flawed, because the premiums it could realistically hope to collect would never be sufficient to cover the cost of anticipated benefits.
But Democrats charged ahead with it anyway, and assured the American people that the program was on firm financial footing. Senate Majority Leader Harry Reid, D-Nev., had even claimed it was “fully paid for” over decades. Though it was madness, there was method in it.
Because the program was slated to collect five years of premiums before doling out any benefits, the Congressional Budget Office determined it would reduce the deficit by $70 billion over 10 years — or about half of the deficit reduction Democrats claimed from the health care law.
The CLASS Act’s flawed design is just the tip of the iceberg. The entire health care law rests on claims that won’t stand up to the test of reality. Just start with the Medicare cuts.
The Medicare program undeniably needs an overhaul, because it is the primary contributor to our nation’s long-term debt crisis. But Democrats have argued that the changes to Medicare they enacted (valued at about $500 billion at the time of passage) would help shore up the program’s finances, while also claiming that the $500 billion would help pay for Obamacare.
As the CBO and Richard Foster, the chief actuary of the Centers for Medicare and Medicaid Services, have explained, however, this is double counting. In reality, the same $500 billion cannot simultaneously be used for both purposes.
It was Foster who warned the Obama administration about the CLASS Act back in July 2009, writing that, “Thirty-six years of actuarial experience lead me to believe that this program would collapse in short order. …” So some of his other predictions are worth noting.
Asked about the Medicare cuts at a House Budget Committee meeting in July by Chairman Paul Ryan, R-Wis., Foster said, “It’s pretty hard to imagine they could be sustainable.”
The problem is that the law doesn’t control the underlying growth in health care costs, so cuts to payments to hospitals and other Medicare providers will be difficult for the system to simply absorb.
According to his office’s post-passage estimates, 15 percent of Medicare providers would become unprofitable within the first 10 years of the law’s enactment. And if Congress were to respond by scaling back the cuts, then the whole case that Obamacare was “paid for” completely falls apart.
“Make no mistake: The cost of our health care is a threat to our economy,” Obama told the American Medical Association when selling his plan. “It’s an escalating burden on our families and businesses. It’s a ticking time bomb for the federal budget. And it is unsustainable for the United States of America.”
Yet according to Foster’s analysis, health care will actually eat up a larger share of the economy 10 years after enactment of Obamacare than it would have had we simply done nothing.
A separate analysis by the CBO found that the legislation would increase individual premiums by 10 percent to 13 percent relative to the status quo Obama deemed “unsustainable.”
Though the CLASS Act was just one component of Obamacare, its swift demise in the face of reassurances should cause Americans to view the rest of Democrats’ health care claims with added skepticism.
Philip Klein is senior editorial writer for The Examiner. He can be reached at [email protected].
