Sunday, October 16, 2011

Fail: Long-Term Obamacare

CLASS dismissed.

When analysts who weren't blinded by ideology warned that the long-term care provision of Obamacare--which is called the Community Living Assistance Services (CLASS) Act--was fiscally unsustainable, they were just steamrolled in the mad rush to get the dreadful bill passed. A Democrat senator even called it a Bernie Madoff-style "Ponzi scheme" (terminology that later got Rick Perry in hot water in connection with Social Security), yet voted for it anyway.

But it turns out the the administration is abandoning the program:
The Obama administration cut a major planned benefit from the 2010 health-care law on Friday, announcing that a program to offer Americans insurance for long-term care was simply unworkable.

Although the program had been dogged from the start by doubts about its feasibility, its elimination marks the first time the administration has backed away from a key piece of President Obama’s signature legislative achievement.
Byron York of the Washington Examiner explains:
Democrats structured the program to collect premiums for years before beginning to pay out benefits -- thus, it appeared to reduce the deficit when it would in fact greatly increase the deficit once it began making payments. As a voluntary program, it would become acutely unworkable if, as expected, only those in need of long term care signed up for it.
At National Review Online, Yuval Levin points out that "the the administration’s own [Centers for Medicare and Medicaid Services] actuary said it would never work."

Levin adds that this is just one provision of the overall law that must be replaced by market-based insurance reforms:
This confirmation that Obamacare cannot in fact defy the laws of mathematics and accounting should serve as a warning regarding the implementation of the broader law, most of which would begin in 2014 if it is not repealed by then. The other major provisions of the statute are also grossly ill-designed. If it is permitted to take effect in full, the law will cause premiums to rise rapidly in the individual market and create major dislocation in the employer market, driving people into vastly overregulated exchanges that would push premiums higher still, and then initiate a program of subsidies whose only real answer to the mounting costs of coverage will be to pay them with public dollars and so inflate them further. It aims to spend a trillion dollars on subsidies to large insurance companies and the expansion of an unreformed Medicaid system, to micromanage the insurance industry in ways likely to make it even less efficient, to cut Medicare benefits without using the money to shore up the program or reduce the deficit, and to raise taxes on employment, investment, and medical research. CBO does not expect it to make a real dent in the inflation of health-care costs or to avert the fiscal implosion of Medicare. Instead, it will double down on price controls and centralized administration and make a real reform of our system much more difficult.
Again, can anyone explain why any rational lawmaker operating in good faith could have voted for this bureaucratic monstrosity? elaborates that the Democrats knew all along that the CLASS Act was a financial disaster but "no one on the Democratic side was willing to halt it before the bill passed because their fiction about 'bending the cost curve' was too precious to ObamaCare salesmanship."

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