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  • The CLASS Act: Obamacare’s Other Public Option

    The American people made it clear during the recent health care debate that they were leery of a public option.

    But included in the Patient Protection and Affordable Care Act (PPACA) passed by Congress is the CLASS Act, a public option of a different sort: a government-run long-term care entitlement.

    In recent research, Heritage analyst Brian Blase lays out why the CLASS program will not offer a better alternative to plans available in the private market but will instead suffer from severe adverse selection, either necessitating a taxpayer bailout or resulting in mounting premiums or reduced benefits for those who participate.

    The CLASS program wasn’t included in the PPACA because it’s good policy—it was included to make the legislation look $70 billion cheaper. The program will require beneficiaries to pay premiums for five years before receiving any benefits, so it’s only a revenue raiser in its initial years.

    But later down the road, the program will add to the deficit, primarily due to its actuarial unsoundness. Blase explains, “The problem is that programs, such as CLASS, that are guarantee issue and that ban medical underwriting are likely to unravel from severe adverse selection. Healthy individuals who desire [long-term care] insurance will find better quality products at lower prices in the private market, leaving a risk pool for CLASS that will overwhelmingly consist of the working disabled. This places American taxpayers at great risk of paying for a future bailout.”

    Senator Kent Conrad (D–ND) called the CLASS Act “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.” Before passage of the PPACA, he and six other Senators who ultimately supported PPACA wrote to the Senate majority leader: “We have grace concerns that the real effect of the provisions would be to create a new federal entitlement with large, long-term spending increases that far exceed revenues.”

    To find out about the CLASS Act and the bipartisan group of policymakers and non-partisan actuaries (here and here) sounding off on its disastrous consequences, click here.

    Posted in Obamacare [slideshow_deploy]

    6 Responses to The CLASS Act: Obamacare’s Other Public Option

    1. Pingback: Virginia Right! News Hound for 8/6/2010 | Virginia Right!

    2. mary k. engleton 311 says:

      while watching John Thune on S-Span why have i never heard the question is medicare welfare for the old? i am 63yr and i will use whatever money i put into the system for however long it lasts but why would i be able to continue taking money from the American people for the rest of my life. the same goes for Soc.Sec.if you have a certain income(from all sources) and you use up the money you put in why should you be able to keep withdrawing for your lifetime? to means test after 100% withdrawl of deposited benifits should be enacted by the congress in my opinion

    3. freefromfacism calif says:

      People need to read the story about Charles Ponzi he was honorable to his word which brang more and more people to him and he was controling the money market and the government did not approve so they made up lies to discredit him and put him in prison. He yold people " if you loan me 75 dollars today I will pay you 125 dollars tommorrow and never did not pay what he claimed. The government takes your money to pursue the war against you and you can read about it in the library of congress and seach for the Law Merchants Doctrine clearly establishes that the war is going on in America everyday and you can learn the rules that are against you California is considered CA/MG"California/Millitary Government and it also lets you know that there is no democratic party anymore so that means that it don't matter who you vote for they all represent republicans and others act as democrats when they are not. Its the way of Americans to believe what they have been told instead of finding out your position as an alien and making this republican goverment extinct. Republicans are all about slavery and according to the rules of war this is not frowned upon because no person knows and I do know this now inwhich the people need to claim state citizenship as told in the rules of war for war won't end against you until you make the claim

    4. NICOLE LEBLANC says:

      The CLASS act / Healthcare reform will save $ in medicaid! Healthcare reform is entitlement reform! We need to provide healthcare to everyone not just the disabled! We also need to lower cost which will help create jobs!

    5. Laura McReynolds, Qu says:

      The CLASS ACT began with good intention. We are facing a longevity crisis greater than the current health care "crisis". Costs will surge as our elderly require more and more services for a longer period of time. Add to that the baby boomer generation and you have what many have been calling a demographic tsunami.

      The problem is the unintended consequence. My understanding is that people will automatically be "opted in" and as the article states will fund their long term care for 5 years before any benefits can be paid. Then, when it comes time to pay up, the daily benefit that CLASS will provide will be FAR SHORT of the daily expense our elderly will need. This ACT will give our aging population a further false sense of security. Already too many believe that Medicare will cover their long term care needs, when it fact, it DOES NOT.

    6. Jason Sutton, Oklaho says:


      If you believe ObamaCare will accomplish any of the things you listed, you are either incredibly ignorant of what is actually included in the new law or incredibly naive…ObamaCare not only steals Americans liberty through the enactment of an individual mandate to purchase health insurance, it usurps states' rights, massively increases Medicaid (both in size and financial obligations on the states), increases taxes on middle class and poor Americans, drives millions of citizens out of their current employer sponsored plans, increases costs for insurance on younger consumers, forces states to ration care through Medicaid, forces physicians to ration care through the setting of price controls on insurers, does nothing to restrain the true costs that drive up healthcare and will cost trillions of dollars more in the first 10 years than what Obama has claimed. Yes, our healthcare system needs reform, but this is not the answer…

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