White House Still Promoting CLASS Act

Portion of Obamacare was repealed on New Years Day 2013

October 10, 2013

The White House is still promoting an Affordable Care Act program that was repealed earlier this year and repeating claims regarding its financial soundness that were contradicted even by top administration officials overseeing it.

The Community Living Assistance Services and Supports (CLASS) Act was a long term care insurance program created by the ACA, commonly known as Obamacare, but repealed as part of a budget deal on New Years Day 2013.

Opposition to the program, considered the brainchild of the late Sen. Ted Kennedy (D., Mass.), grew as even Obamacare proponents at the top echelons of the Obama administration acknowledged that it was unworkable.

Health and Human Services Secretary Kathleen Sebelius, for instance, called the CLASS Act "totally unsustainable."

The White House’s website continues to promote the program, calling it "a self-funded and voluntary long-term care insurance choice" despite Sebelius’ admission and the program’s repeal.

"No taxpayer funds will be used to pay benefits under this provision," the site insists. "Safeguards will be put in place to ensure its premiums are enough to cover its costs."

Those claims are fanciful, health care experts say.

"The CLASS Act is the original Obamacare lie: a plan for long term care which didn't pass the most basic math test," said Ben Domenech, a senior fellow at the Heartland Institute specializing in health policy.

"The only difference is that unlike the rest of Obamacare, CLASS's math had to work, thanks to a requirement added to the bill by then-Sen. Judd Gregg (R., N.H.)" that required the program to be completely self-sustaining.

The program’s structure prevented that self-sufficiency due to a problem called "adverse selection." CLASS was designed to be voluntary, meaning the people who would sign up for it were those most likely to need long-term care.

Because few individuals were expected sign up unless they expected to later draw funds from the program, its critics pointed out, it would likely pay out far more than it took in, making it unsustainable without additional federal support, which the administration said it did not intend to provide.

That structure, some critics maintained, was used to game the Congressional Budget Office’s deficit scoring of Obamacare generally.

Since CLASS would begin taking in fees immediately but would not begin to pay out benefits for six years, its red ink was backloaded, improving Obamacare’s 10-year deficit numbers, which would rise sharply in the out years as CLASS began paying out benefits.

The White House insisted as late as 2011 that the program’s fiscal difficulties could be overcome. Obama said in October 2011 that he opposed repealing CLASS.

"Repealing the CLASS Act isn't necessary or productive," one administration official said. "What we should be doing is working together to address the long-term care challenges we face in this country."

HHS announced it was abandoning the program days later.

"We don't see a path forward to be able to" implement it in compliance with provisions requiring it be financially sound, an HHS official said.

The White House did not respond to a request for comment on its continued promotion of the program.

Domenech called that promotion "completely irresponsible."

"If only the rest of the bill—heck, all bills Congress passes—had to meet the same actuarial requirements as CLASS, we'd have a lot fewer programs built on outright lies," he added.