The Obama administration has admitted that it cannot move forward with a major feature of Obamacare, its long-term care insurance program, due to the fact that it contains a critical design flaw.
The Community Living Assistance Services and Supports program, known as CLASS, a pet program of the late Sen. Ted Kennedy (D- Massachusetts), was to have been sponsored by the federal government but maintained as a voluntary plan to which healthy, younger, working Americans would contribute in the event they became disabled later on in life. Participants would have paid a monthly premium that ranged widely between $235-$3000, depending on income, during their employment years, and then collected a daily cash benefit of at least $50 if they became disabled.
The tragic flaw in the plan is that unless large numbers of healthy people are willing to sign up for the program during their working years, the cost of the program would become prohibitive due to the needs of the disabled who would benefit from the plan. Unlike the purchase of long term care insurance in the private sector, CLASS did not offer lower premiums to healthier participants. Thus, the program attracted those who were already disabled in some way, yet able to work to some extent, and who anticipated the need for long term care in the future. Without healthy subscribers paying into the system, these individuals would not likely be able to afford the steep premiums.
Not surprisingly, if the program had survived, it would have ultimately been “too big to fail” and required a tax bailout. Congressional Republicans intend to repeal CLASS, which, according to the Heritage Foundation was “poorly designed, and actuaries criticized it as being unsustainable well before the passage of Obamacare.”
Secretary of the Department of Health and Human Services, Kathleen Sebelius, who had argued for some time that the flaw in the program could be fixed, announced on Friday that the plan could not, in fact, be saved–a situation that was met by significant protest on the part of liberal seniors’ lobby, AARP, and union leaders. Supporters of CLASS wrote a letter to President Obama, urging him to use his “authority,” provided to him under his signature legislation, to “make necessary changes to the design of CLASS to make it work. We fully expect the administration to go forward and use that authority in implementing the law.”
It is almost incredible that the Obama administration entertained the notion that CLASS would actually work. In fact, it is questionable whether the White House ever expected it to survive or if it just threw the program into Obamacare as a bone to its base, never intending to make it viable. In essence, CLASS was really an entitlement within an entitlement, another entire Social Security program built into a government health insurance plan.
Of course, when AARP and the unions wrote the president, asking him to use his “authority” to make CLASS work, we can be assured that what they were urging is for the program to become mandatory rather than voluntary.
All of Obamacare must be repealed, but the fact that its authors now admit CLASS is unsustainable is a major victory for taxpayers and freedom lovers alike.