In 2009, President Obama and his allies in Congress included an expensive long-term care program — the CLASS Act — in the ObamaCare bill. The purpose was to help pay for ObamaCare with money that would be raised by CLASS, and supporters claimed it would actually reduce the deficit by $86 billion. This single deficit-reduction promise represented nearly half of the total “budget savings” the president claimed (incorrectly, it turns out) ObamaCare would provide.
Many experts at the time dismissed these CLASS “savings” as a dangerous gimmick that would significantly erode our fiscal health if enacted. For the first five years following enactment of the CLASS Act, the program is designed to only collect money but not spend it. That is why the program looks like it raises revenue within the first 10 years. After that time period, however, the money paid out in benefits would quickly eclipse the money coming in and the program would require a taxpayer bailout to deliver the benefits it promised to its enrollees.
That is why Medicare’s chief statistical analyst warned that his “36 years of actuarial experience” led him to conclude that CLASS “would collapse in short order and require significant federal subsidies to continue,” also suggesting the program would end in an “insurance death spiral.” According to The Wall Street Journal, the CLASS program “could only be solvent if 230 million Americans enrolled, which is more than the current U.S. work force.”
Just like the recent Solyndra scandal, red flags were also raised internally — and mostly ignored. For instance, one of the administration’s own senior officials called the program a “recipe for disaster” in 2009. Yet, the administration insisted that “savings” in CLASS were “not a budget gimmick,” and went ahead with implementing the law anyway.
Even Senator Kent Conrad, then-chairman of the Budget Committee and a member of the president’s party, warned that CLASS was “a Ponzi scheme of the first order, the kind of thing Bernie Madoff would be proud of.”
Not surprisingly, on Oct. 14, Health and Human Services Secretary Kathleen Sebelius finally announced that the administration would suspend its efforts to implement the program, as there was not a “viable path forward for CLASS implementation.” Since that announcement, the nonpartisan Congressional Budget Office declared that repealing the program would not add a penny to the deficit; in other words, the $86 billion in claimed “savings” also turned out to be false.
This entire situation is unfortunate, and it simply adds to the frustration I know many Arizonans feel toward Washington. They are tired of the budget tricks and the fiscal gimmicks.
Moreover, this debacle raises several worrying propositions for our country. For one, we can now be absolutely certain that ObamaCare is going to be much more expensive than previously advertised. In fact, experts tell us that it could end up costing taxpayers as much as $2.6 trillion over the next 10 years, exacerbating our already massively large debt — which, at $14.9 trillion, is nearly the size of our entire economy.
With massive fiscal and economic crises threatening our nation, we cannot afford these kinds of Washington gimmicks. It’s one more reason why I believe we must repeal ObamaCare and replace it with reforms that can actually reduce health costs and improve the quality of care for patients — without costing American taxpayers and adding to our national debt.
In the meantime, there are efforts under way to repeal at least the CLASS Act portion of ObamaCare. That’s a good start.