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Tuesday, September 27, 2011

Interesting post from Heartland Institute: Ben Domenech

Consumer Power Report #291: No CLASS

September 27, 2011

Welcome to the Consumer Power Report.
One of the worst aspects of President Barack Obama’s health care law is the CLASS entitlement, an unsustainable long-term-care program adopted as a testament to the late Ted Kennedy. CLASS is practically designed to fail, and the fact that the Congressional Budget Office judged it a positive deficit reform should tell you a thing or two about how they calculate things.
Now that the administration has gotten around to implementing CLASS, it turns out the thing just won’t work right – so on Thursday they let slip the program was being shut down. From the AP:
In an interview Thursday, a top technical expert working on a financial plan for CLASS said the eight people on the program staff were told last week they would be reassigned.
“They told us that they were going to take a pause,” said Bob Yee, an actuary responsible for long-range cost estimates. Yee said he decided after getting the news to leave the government, and plans to return to private industry.
“It’s difficult trying to find a solution without an in-house actuary,” said Yee. “My feeling is that they are not going to make some wonderful discovery. You draw your own conclusion about what’s going to happen.” Yee’s departure was first reported by The Wall Street Journal.
A central design flaw has dogged CLASS from the beginning. Unless large numbers of healthy people willingly sign up, it will create a situation where soaring premiums for a smaller group of frail beneficiaries eventually destabilize the program.
Avik Roy has more on this, along with several updates that give you a picture of an administration struggling with how to handle this announcement that a liberal pet project is biting the dust. Their clumsy admission of the truth didn’t help – now liberal Senators are upset about the decision. Don’t confuse us with math, they say.
“It’s sad,” said Sen. Barbara Mikulski (D-Md.), a champion of the program that was developed in her Senate HELP Committee by the late Sen. Edward Kennedy (D-Mass.). “We’re evaluating our strategy now.”
Rep. Frank Pallone (D-N.J.), who sponsored the program in the House, said terminating the program would be a “huge mistake.”
“Obviously the administration has put some kind of hold on it,” he told The Hill. “I’m going to try to find out why, but beyond that I’m going to continue to press them to implement it as soon as possible because it makes sense.”
But this isn’t just a partisan bias against unworkable systems. To his credit, North Dakota Democrat Kent Conrad – who has called CLASS a “Ponzi scheme of the first order” – acknowledged that the calculations behind it just don’t work. “It’s unfortunate because it tries to address a real need. The problem is what was put in place doesn’t work, it doesn’t add up,” Conrad said. Couldn’t you say that about all of the president’s health care policies?
-- Benjamin Domenech

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