• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Morning Bell: The Latest Obamacare Implosion

    Inefficient programs that don’t solve problems and are passed against the will of the American people seem to be the Obama Administration’s forte. Now their high-minded aspirations of a health care revolution are quickly unraveling as fatal glitches in Obamacare become apparent.

    Next up for implosion? The Community Living Assistance Services and Supports Act, otherwise known as the “CLASS Act,” which creates a government-run long term care insurance program too costly to sustain. At a time when entitlement programs in America have spun out of control, liberal proponents of Obamacare were pushing a new one that had no hope of staying afloat. Now, they are trying hide the fact that they were wrong as another bungling layer of Obamacare is exposed.

    From its creation, the CLASS Act was completely unsustainable as written into law. The problem? Due to the effects of adverse selection, the program would charge high premiums that would deter less risky individuals from participating. Indeed, participating in the CLASS program would only appeal to those in poor health expecting to need long-term care in the future, further escalating premiums.

    Due to its design, it was clear to Medicare actuaries and even liberal Members of Congress that CLASS would fail before it began. Like so many other aspects of the struggling Obamacare law, this one’s flaws are abundantly clear. Brian Blase explains why the CLASS Act is broken and how its ill-conceived design would lead to its inevitable collapse or bailout:

    The main problem is that the program’s design will result in a badly skewed pool of participants … This means healthy individuals are less likely to participate because they do not receive credit in the form of a lower premium, like they would if they purchased [long-term-care] insurance in the private market. Instead, CLASS participants are likely to be disabled individuals who are able to work part-time and individuals who anticipate future [long-term-care] needs.

    Moreover, the adverse selection problem is exacerbated because individuals earning below the poverty line are subjected to only a $5 monthly premium, and less healthy people are much more likely to be below the poverty line. The artificially low premium for them means that premiums will have to be much higher for others, which will diminish overall enrollment in the program and worsen its long-run solvency. The poor design of CLASS almost guarantees that the program will collapse or need a bailout.

    Last week, Heritage reported on internal emails sent prior to Obamacare’s passage warning the Obama Administration of CLASS’s impending disaster. While former House Speaker Nancy Pelosi and friends were frantically shoving the 3,000 page health care bill through Congress, they were ignoring vital information about a program that was actuarially unsound and completely unworkable. In fact, as Heritage’s Lachlan Markay reported, federal health experts told them via email that CLASS would result in an “insurance death spiral.” Congress passed it anyway.

    Health and Human Services secretary Kathleen Sebelius has since stated that CLASS is “totally unsustainable” and “financially unsound.”  The Department claimed it could solve these problems using its administrative authority, but the only way CLASS could possibly survive would be via a taxpayer bailout, varying premiums according health status, or by mandating worker participation–none of which are acceptable options. It’s time to admit they are fighting a losing battle.

    Bob Yee, chief actuary for the Health and Human Services office that administers the CLASS Act, recently left the office after being told his services weren’t needed. He told The Wall Street Journal that other office staffers were being reassigned.

    HHS is subsequently denying that they are killing the CLASS Act despite no longer having any employees working in its office. It’s likely that the Administration has finally come to the realization that CLASS is beyond help.

    A bicameral group of Republican Members of Congress are demanding answers in an oversight letter sent to HHS requesting information on their latest moves and what they knew about CLASS before Obamacare became law. Given CLASS’ financial instability, James Capretta and Brian Riedl explain that Congress’ best move is to repeal the law instead of piling debt upon debt with yet another unsustainable entitlement:

    CLASS is destined to run short of funds, creating pressure for another massive taxpayer bailout. The biggest threat to the long-term prosperity of the country is the massive unfunded liabilities for the nation’s major entitlement program. The last thing Congress should be doing is adding to the burden of future taxpayers, which is why CLASS Act repeal is the most fiscally responsible—and ethical—course to follow.

    So while HHS tries to cover their tracks by claiming CLASS is still being analyzed, it’s clear that the only responsible thing for them to do is admit they were wrong in the first place and end this awful program before it’s too late. And more importantly, Congress should repeal Obamacare before the biggest implosion of all hits the American people.

    Quick Hits:

    Posted in Obamacare [slideshow_deploy]

    46 Responses to Morning Bell: The Latest Obamacare Implosion

    1. gitredy says:

      Well of course, Ericka, but don't you remember, we had to "pass it to find out what's in it!

      • Robert, TX says:

        Yes, and many of the republican sheep were loading it up with earmarks to benefit their favorite pharma, HMO, or healthcare management consulting company – just in case it did pass. It stinks to be played a fool.

      • Bonnie says:

        It scares me to think about what else we will learn as we peel back this onion. Don't forget there are many, many layers to be exposed.

    2. Emil Blatz says:

      Health and Human Services secretary Kathleen Sebelius has since stated that CLASS is “totally sustainable” and “financially unsound.”

      Was that a typo or is this indicative of the quality of contradiction present in the Obama Administration?

      • I believe that it's a typo in this report. When Kathleen Sebelius testified before the Senate Finance Committee in February 2011, she said ". . . if you would take a snapshot of what was written as the criteria of how many years someone would have to work, what the age would have to be to enter the program, if there would be any indexing in benefits – the snapshot in the bill, I would agree, is totally unsustainable." Watch it on YouTube at http://www.youtube.com/watch?v=Pup5OM6QOb8

    3. Guest says:

      You report that, "Bob Yee, chief actuary for the Health and Human Services office that administers the CLASS Act, recently left the office after being told his services weren't needed. He told The Wall Street Journal that other office staffers were being reassigned." This does not necessarily indicate that HHS is "killing the CLASS Act … [by] … no longer having any employees working in its office." It may indicate that HHS is attempting to bury the fact that the program is a massive funding sink-hole — one into which the Obama Administration, in yet another effort to "Glut the Beast," fully intends to pour taxpayer funds at the earliest opportunity. Do not assume that an action that seems irrational to ordinary people would be irrational to those in charge of this government. Obama's program appears to be to radically transform the United States into an impotent welfare state by squandering our resources and encouraging dependency among the people. Hiding the CLASS Act's inevitable insolvency while perpetuating the program — BECAUSE it is insolvent — would fit this program precisely.

      • billy barney says:

        CLOWARD & PIVEN don't you know… Columbia breeds them; and we're stuck with them. Tell me again why the Two Party system is necessary in this Country. The Oedipus Man won't stop it's his Manchurian Mission to break the economic back of America…

      • Bobbie says:

        Your exactly right, Guest. Not only are they draining wallets of those who have wealth, they're killing them off! I don't believe the government goes by income to qualify the elderly. All this responsibility and government can create any crisis they want. Weather financial or personal health. I think they took in people with money convincing them of benefits but using the money to pay ways or for cover up or fraud or guilt! Look at the exploitation. NOTHING IS FAIR ANYMORE!!!

    4. victorbarney says:

      Everybody is missing the point! It's ONLY about creating an economic collapse in America! It's that simple!

    5. Gayle says:

      My understanding is that obamacare was pushed on us in a lump total and no provision was in it that would let you pass parts. In other words "all or nothin", so drop the whole mess. obamacare sounds more like a payback to his supporters like solyndra, etc.

      • Dinah L says:

        That was my understanding also. Which makes me wonder why these court cases that have alternately found one part of the law constitutional or NOT constitutional have not stressed that if the latter opinion prevails the whole works is tanked. This law is such a mess it's hard to understand even the parts we thought we understood!

    6. Texas Granny says:

      Another failed Obama entitlement program which should be scrapped immediately.

    7. Jane Horton-Leasman says:

      Why is no one telling Seniors (many of whom are low income, with no COBRA the last 2 years) the increase that is going to be deducted on a monthly basis from their S.S. checks beginning in 2012 and increasing in increments going forward. Why are none of the Republican candidates talking about Medicare and what Medicaid, escript, et al is draining from Medicare…and the Seniors are the ones who will pay the bills.

      • Robert, TX says:

        That is an excellent point. Bottom line, our economy cannot survive, or afford, the massive increases in medicaid, welfare (already over 100 million recipients), unemployment programs that have become permanent; a ten-year war AND continue to pay social security base payments and medicare costs. Something has to give. The gutless republicans in the House are afraid to DO anything, while Obama/Reid are moving forward (since they have zero real opposition) to increase everything – which WILL crash our economy, and our American way of life. A tough choice for seniors.

    8. Trixie says:

      He has made good on his promise of CHANGE! He never said that it was a GOOD CHANGE, but America has changed since he got the office. Can't wait until he is out, because if he comes out again GOD HELP US !

    9. Don Garrison says:

      Please don't use Long Term Care insurance in the private sector as a good example. The insurance companies have the Texas insurance agenciy in their pocket. They are raising premiums at trhe rate of 40% per year. The agency says the companies have tlo make a living. This traps people that have paid into the program for 6 to 10 years. They either cancel and lose the investment of pay the higher price.

    10. Whicket Williams says:

      The entire health care cost structure in the US is Insane. In Ecuador, total cost is 45 dillars a month, and everybody agrees it is as good as the health care here, which cost so much nobody ever even tries to figure out how much it cost! The only cure is to shoot the patient! The patient is the entire system!

    11. Whicket Williams says:

      The only answer is to leave the U.S. and go somewhere that the mother company does not yet control!

    12. Wayne Peterkin says:

      As a conservative who is staunchly opposed to Obamacare, I generally agree with this article, However: I am also a healthy 67 year-old who in the last ten years buried both my wife's Mother and my own. Both of these terrific ladies required some nursing home care near the end of their lives. In one case, the cost was $3,000/mo and in the other case was $4,500/mo. I do NOT favor the CLASS Act, but want everyone to understand that none of us know what kind of end-of-life care we may need. That's why my wife and I carry independent long-term care insurance policies. While I hope that neither of us ever use that insurance, there is no other alternative for paying for that care. The federal government should not accept that responsibility, but individual taxpayers would be well advised to protect themselves. This article seems to imply that since most people will never need a nursing home, they should not consider doing so.

    13. H Snyder says:

      "victor barney" beat me to it: Obama AND the Dems have put the U.S. on the road to insolvency deliberately. A financial collapse would give them, and perhaps the Communist Chinese the opportunity to take control of all aspects of the U.S. socio-poliico-economic system.

    14. LDF says:

      What a surprise that this is not in the lamestream media outlets! Thanks Heritage!

    15. Monica says:

      What was it Milton Friedman said about judging a program by its results, not by its intentions???

    16. eggsbenedict says:

      Obamacare must br repealed now. Obama must be impeached now. He should not be allowed to be on any ballot in any State. He is an imposter who is under the control of George Soros and those cronies that contributed big dollars to get him elected. His programs are going into effect for one reason and one reason only and that is to bring this nation down to its knees in economic poverty.

    17. Carol M Kite says:

      Don't you get it yet? Obama's sole purpose is, always has been, to reduce America to a shambles of what it has always stood for, breaking the backs of struggling taxpayers & Congress hasn't cared, for years, about sincerely representing their constituents, just fattening their wallets. Somehow these injustices have to be stopped, dead in their tracls!

    18. B Eric says:

      This is just one more proof of the Obama Dictatorship. Passing bills that were not read by anyone. If omama is so smart how come he forgot the first thing a lawyer lears is DO NOT SIGN ANYTHING BEFORE YOU READ IT!

    19. The Farmer says:

      The only cure is: "ONE TERM LIMIT" 6 or 8 years period !!!
      If we had it, this guy would never had been elected, but if he bought the election he would never have been able to get such destructive laws on the books.
      If the reader cares a wit about this land get behind the "ONE TERM LIMIT" plan every time you give your opinion.
      Don't expect the candidates or the media to give this idea support they think they need things like they are, so people won't lose interest in what they have to say.

    20. Bill says:

      There is nothing to be done except to repeal the whole thing. Can't rational people see that we had a bill full of secret poison pills thrown at us by the Democrats. This ALONE should keep anybody from voting Democrat for 100 years!

    21. Mary......WI says:

      Time is running out for Congress to repeal "Obamacare". What do the liberals not understand as to how waiting for long periods of time to be diagnosed and treated for serious illness is detrimental for a success outcome…especially after hearing Candidate Herman Cain reveal his brush with death last night at the debate.

      What do liberals not understand as to how much this "unsustainable healthplan" will cost the America people both financially and physically. Liberals accuse conservatives playing politics with the economy…..HAH….It is the liberals who are playing politics with the healthcare of the American people by not repealing Obamacare because of politics.

      Congress needs to REPEAL, REPEAL, REPEAL now…..time is running out!

    22. Dinah L says:

      I left a reply to Gayle and it didn't show up. What's the deal? It couldn't have been offensive; it was a positive reply.

    23. Robert, TX says:

      This debate is a real gas. Of course, the best part is that the RINOS led by little johnny have NOT repealed Obamacare, nor have they even voted to defund it (as they promised during their "making government smaller" campaign last year). We have had "socialized medicine" since 1965, and it has moved UP and FORWARD every single day since, from the HMO legislation in the 1980's, to the scandalous big pharma bills of the 1990's and 2000's. And over 275 million "Americans" still demand "free" healthcare – which is one of the reasons the republican sheep do NOTHING.

    24. Ray says:

      I firmly believe it is unfair to be unfair and that, no matter what, the only fair thing to do is to be fair. That leaves me with the only fair thing to do and that is to throw my hat in the ring and run for president.

      I believe that I can straighten out this mess because I can talk my way into and out of almost anything I want. So long as nobody challenges me that is. Furthermore, I've had a real job in the past… somplace. At least once. Even paid taxes… I think anyway.

      So I'm even more unqualified than the current guy out there flying everywhere in Airforce One. And the other guys flying whatevers to wherever who are running for president. Or is it President? Maybe even PRESIDENT?

      Anyway, "If you love me"… "vote for me"? I'm older, not quite as ugly, shorter, served in the military, not worth over a hundred million without ever having a real job and only being in office for 2 years, and you can already see… I don't talk that good neither. So trust me… you can trust me!


      P.S. What was that about the Obama Healthcare Bill?

    25. Glen says:

      Obamacare has nothing to do with bringing down the cost of Health Care. So wasn't this another lie by the administration? The only result(which a lot will kick in in2014) is total Gov't takeover of Health Care.

    26. armedandsafe says:

      "While former House Speaker Nancy Pelosi and friends were frantically shoving the 3,000 page health care bill through Congress, they were ignoring vital information about a program that was actuarially unsound and completely unworkable."

      Ah, but they did not "ignore" that fact. It was in the plans. Nothing to worry about, folks. Everything is proceeding according to plan. Move on, now.

    27. Curt Krehbiel says:

      The CLASS Act will appeal to Obama's supporters and will not be cancelled before the election in 2012.

    28. Jeanne Stotler says:

      Jane it's COLA, COST OF LIVING ADJUSTMENT, no we didn't get any 2010 or 2011, BUT we did get an increase in Part B premium and I got one in supplement. I am sure ther are many other widows like me, who depend on our checks, my husband made arrangements for me BUT his company rewarded his 33 years of service with not giving it to me after he died. You see the gov't took over METRO and like everything else they touch it stinks. This President does not respect the elderly, not even his grandmother, nor his mother, he was too busy to be at eithers bedside when they died, and OH YES, he lied about his mothers last days just to bolster his OBAMACARE, what a gem. Nov. 2012 VOTE

    29. Blair Franconia, NH says:

      Herman Cain's a survivor both Stage 4 colon and liver cancer. He said that he'd be dead if an Obamacare bureaucrat had told him to wait. I guess Sarah Palin was right about the death panels after all.

    30. Howard Reed says:

      Hello America,

      The SCOTUS should step up to the plate and do the moral thing by putting this monstrosity out of its misery. If 'We the people . . .' come together in mass to elect an America friendly executive and legislative branch will for the good health of the country put it under the sword. The thing is dying a slow death.

      The Turban Torpedo

    31. Patricia Baker says:

      ObamaCare needs to be repealed but as long as Boehner and Cantor are in charge this will not happen. Boehner and Cantor gives in to Obama every time. Boehner and Cantor have to go in order for anything
      to get done. They are never going to go against Obama. The government has no business providing
      Health Care to the American people. It's not Constitutional.

    32. carol,az says:

      Socialized medicine that includes every illegals person living here, that O' Bo, Bo wants to make instant citizens, equals certain medical bankruptcy.
      OOPS, I'm committing class warfare again according to D.C., because I'm citizens.

      Could corrective action come from space with the untenable trash heading towards earth?
      If it lands on the White House lawn will we find a space alien coming forward with an olive branch symbolizing forgiveness, telling all of us, that Mr. Bo,Bo sent for them, with his new social security number along with millions of others living here under fraud?
      How's that for transparency America, remember that word?.

    33. Dr. Henry Sinopoli says:

      Heritage is there anything we can trust coming from Obama or the Democrats…but remember for the last number of years, including the Bush years, many compliciant Republicans drank from the public fountain and became rich…

    34. Greg L says:

      Well it's the same old from mr obama on obamacar so it doesn't surprise me that's for sure. When has he done anything productive our unemployment rate is far worse then when bush go into office. It's the ame old give me a martinne and a Gemini c group and I'd feel a lot better

    35. Denise says:

      My question is: if the CLASS Act was such a good thing for America then why have the likes of Nancy Pelosi, Harry Reid and Obama given out over 4,000 exemptions to their politically well connected friends? That would help voters understand how corrupt this administration is. Would the HF do a report on that and tell WHO got the waivers?

    36. Jerome Thomas says:

      If Republicans could reverse the hundreds of Obama care exemptions that have been made for unions and other groups, there would be millions more individuals to oppose the entire mess including the CLASS ACT.

    37. wayne says:

      It dosent matter what I think

    38. Looie says:

      It's really simple to me about ALL these programs (Obama Care, Rules & Regulations, Jobs For America, Etc.) is to create new bureaucrats who will VOTE for the Liberal Leftist in office in 2012. What's sad is how he got elected and a Congress without the will to stop him. Elections of late, have resulted in people voting AGAINST, rather then FOR, including 2008. Hopefully, in 2012 we will witness a huge AGAINST vote by a more educated electorate.

    39. Norbert says:

      Obama care is targeting families with autistic children who will likely need long term health care. They want to pretend they don't exist. They want to push them into a black hole where their delicate needs aren't considered. nevermind it will cost states upwards of a million dollars to place severely autistic individuals into state institutions or group homes. Never mind Obamacare doesn't have a clue what it takes to care for the most vulneralbe of autistic community. Oh, yes, let us just enjoy the sweet words of Obama and others like him. Let us believe their lies. Their empty promises to generate more votes. The fact is Obama and many other politicians don't undertand what it's like to live with an autistic child. They don't care. They don't want to know. They will say anything they can to convince you they care, but the reality is they can't know, they don't want to know, they can care less! Fools! don't be fooled by this nonsense. These people will tell you anything to get another vote, but ask yourselves, do they really understand what it is like to raise an autistic child?

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.