The untold story of the CLASS Act: How concerns were ignored to ensure its passage

posted at 10:05 am on September 15, 2011 by Tina Korbe

Administration officials knew before they even passed the CLASS Act that the voluntary long-term care insurance program it created would be fiscally unsustainable, a new report from select House and Senate Republicans shows.

The Community Living Assistance Services and Supports program, or CLASS, became law in March 2010 as a part of Obamacare. Since PPACA passed, CLASS has drawn extensive criticism, with Democratic Sen. Kent Conrad, for example, calling it “a Ponzi scheme of the first order” and Health and Human Services Secretary Kathleen Sebelius conceding the program is “completely unsustainable” — but the new GOP report shows that HHS officials warned for months even before passage that the CLASS Act would be a fiscal disaster. The administration blatantly ignored those warnings and continued to brazenly count CLASS as a cost-saving measure within Obamacare.

The GOP report, produced by a working group led by Sen. John Thune (R-S.D.) states:

As a result of this investigation, it is now clear that some officials inside HHS warned for months before passage that the CLASS program would be a fiscal disaster. Within HHS the program was repeatedly referred to as a “recipe for disaster” with “terminal problems.” [The Centers for Medicare and Medicaid Services] chief actuary stated on numerous occasions that the program was not fiscally sustainable and would result in what he referred to as an “insurance death spiral.”

According to e-mails and other documents obtained pursuant to this investigation, senior leadership of HHS and Democratic staff in the Senate and House reviewed these warnings but did not change the law and did not inform the public of the doubts about the CLASS Act. Instead, the officials continued to claim the program would be sound, sustainable and actually produce budget savings that could help pay for other parts of the health care law.

While there has been little public discussion of the costs PPACA imposes on employers and states, this investigation revealed for the first time the extent to which HHS both anticipated these costs and yet tried to impose even more burdens. The documents we have obtained demonstrate that officials at HHS knew that the CLASS Act would saddle employers and states with, at minimum, a heavy administrative burden. The e-mails also reveal discussions inside HHS about combating low participation in the program by requiring employers to participate. HHS anticipated this mandate could be imposed at some future date, and it is possible they will still attempt to impose such a mandate through regulation.

The AP provides a quick run-down of the warnings issued by administration officials:

The emails show that the first warning about CLASS came in May 2009, from Richard Foster, head of long range economic forecasts for Medicare. “At first glance this proposal doesn’t look workable,” Foster wrote in an email to other HHS officials, some of whom were working with Congress to get CLASS into the health care law.

Foster said a rough outline of the program would have to enroll more than 230 million people — more than the U.S. workforce — to be financially feasible.

But work on CLASS continued, bolstered by a report for AARP that laid out scenarios for implementing the plan. The AARP study also raised financial concerns, although the seniors’ lobby supports CLASS.

In July, Foster tried again. After reviewing the latest information from Kennedy’s office, he wrote HHS officials: “Thirty-six years of (professional) experience lead me to believe that this program would collapse in short order and require significant federal subsidies to continue.”

Eventually, the administration just stopped soliciting Foster’s opinion and cited more favorable 10-year estimates from the CBO instead — estimates that, because of their 10-year timeline, couldn’t possibly assess the long-term solvency of the program, but did reveal short-term savings.

But Foster wasn’t the only person to issue warnings.

“Seems like a recipe for disaster to me,” William Marton, a senior aging policy official in the administration, wrote in an October 2009 email. Marton explained his concern that large numbers of healthy people would not willingly sign up for CLASS, creating a predicament in which soaring premiums for a smaller group of frail beneficiaries would destabilize the program.

In other words, CLASS runs the risk of adverse selection: Primarily those people who meet the eligibility requirements for benefits — that is, those folks who can no longer perform daily living activities like dressing, meal preparation and personal grooming — will sign up for the program. Premiums would then need to be high to cover the costs of benefits — and those high premiums would, in turn, discourage healthy individuals from enrolling. Too few enrollees means not enough money to cover the costs of the program. The administration’s answer to that just might be to mandate that employers offer enrollment — when it should be to repeal CLASS.

This report is further confirmation that the Obama Administration willfully chose to ignore the fiscal insolvency of the CLASS program in order to achieve a political victory by pushing the president’s health care bill through Congress,” Thune said. “The CLASS Act is a ticking time bomb that will place taxpayers’ money at risk due to fatal flaws in the entitlement program’s design and structure. The American people had a right to know the information revealed in our report before they were put on the hook to pay for this massive new entitlement program.”

Sen. Jeff Sessions (R-Ala.), another member of the Republican working group, had similarly harsh words for the administration’s disappointing dismissal of legitimate concerns from the CMS chief actuary and others.

“To advance the president’s healthcare agenda, it appears a deliberate effort was made by administration officials to hide CLASS’s true cost from lawmakers and the public,” Sessions said. “The deception exposed in this report paved the way to imposing additional financial burdens on taxpayers, businesses, and cash-strapped states—at a time when they can least afford them. The unsustainable CLASS program should be immediately repealed and, without a doubt, this troubling evidence warrants further inquiry.”


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Shocked!!!!!

MES401067 on September 15, 2011 at 10:09 AM

You always write these stories attacking good programs like they are…what’s that term you use? “unsustainable”…..c’mon wake up and smell the coffee dude……nothing is unsustainable as long as there are 55 gallon drums of green ink over at the treasury and rolls of paper just waiting to be printed into money!

See how easy that was?

SDarchitect on September 15, 2011 at 10:10 AM

Cloward-Piven.

pseudonominus on September 15, 2011 at 10:11 AM

“Seems like a recipe for disaster to me,” William Marton, a senior aging policy official in the administration, wrote in an October 2009 email.

I’m a senior too and would probably age just as fast is William is if I had to deal with cr*p like this.

Drained Brain on September 15, 2011 at 10:12 AM

“In the long run we’re all unsustainable.”

tommyboy on September 15, 2011 at 10:12 AM

REPEAL ALL OF IT!!! NOW!!!

capejasmine on September 15, 2011 at 10:13 AM

Sebelius was the biggest patron of Tiller the Killer(he made a fortune off of performing late-term abortions). A ‘woman’ with so much blood on her hands should be shamed-rather than be head of the HHS.

annoyinglittletwerp on September 15, 2011 at 10:13 AM

Un-freaking-believable.

visions on September 15, 2011 at 10:14 AM

annoyinglittletwerp on September 15, 2011 at 10:13 AM

That is why she was chosen to head up HHS. She has no problem with killing babies off, so elderly adults would be no problem either. They need to make an episode of Deadly Women on ID, and devote an entire hour to her.

capejasmine on September 15, 2011 at 10:15 AM

It’s pretty simple, really. The administration is stuffed with folks who only know the GDP. To them it is just one big honey pot. With a number like that they can fix anything. It is theirs to spend, distribute, re-distribute, and gamble with all they want.

Idjits.

Limerick on September 15, 2011 at 10:15 AM

They had to pass it, to know what’s in it.

This albatross is just getting hatched. Just wait until the full grown, adult sized bird is hanging on our neck.

KMC1 on September 15, 2011 at 10:15 AM

The American people had a right to know the information revealed in our report before they were put on the hook to pay for this massive new entitlement program.”

I guess he didn’t get Nancy Pelosi’s memo. We had to pass the health care bill first, then we got to see what was in it. Because the Dims knew that if Americans saw all the crap that was in it first, it would never have had any chance of passing — even with all the Dims’ shady tricks and manuevers.

AZCoyote on September 15, 2011 at 10:17 AM

Oh just shut up and confiscate our “wealth” already. This is just one more example of pass it now, fund it later. That always works out so well.

Flustercluck.

Laura in Maryland on September 15, 2011 at 10:18 AM

…just one thing after another with this clown…

jbh45 on September 15, 2011 at 10:19 AM

Unexpected.

diogee on September 15, 2011 at 10:20 AM

Sebelius was the biggest patron of Tiller the Killer(he made a fortune off of performing late-term abortions). A ‘woman’ with so much blood on her hands should be shamed-rather than be head of the HHS.

annoyinglittletwerp on September 15, 2011 at 10:13 AM

And don’t forget that she QUIT her job as Governor of Kansas halfway thru her term.

Del Dolemonte on September 15, 2011 at 10:22 AM

work on CLASS continued, bolstered by a report for AARP that laid out scenarios for implementing the plan

AARP had obviously worked out some money-making angle on this for themselves (“themselves” meaning the AARP executives, not the seniors their insurance company supposedly represents).

AARP doesn’t support any kind of legislation unless it gives them another way to bilk more money out of seniors. I’m guessing the “scenarios for implementing the plan” laid out by AARP included some deal which gave AARP exclusive rights to sell (or endorse, for a hefty price, the sale of) some type of supplemental disability insurance plans.

I wish seniors enrolled in AARP would get wise to what a scam that organization is.

AZCoyote on September 15, 2011 at 10:23 AM

Anyone care to join me at The Restaurant at the End of the Universe United States?

WashJeff on September 15, 2011 at 10:24 AM

It’s shaping up as another bad week for Obama. And now the WaPo Fact Checker has awarded him two Pinocchios for his “misleading pitch for the jobs bill.”

Coming on the heels of that recent four-Pinocchio award, it’s not even unprecedented.

Drained Brain on September 15, 2011 at 10:24 AM

OT – Chinese Government Protects Farmers From Biden

http://themorningspew.com/2011/09/15/chinese-government-protects-farmers-from-biden/

bloggless on September 15, 2011 at 10:25 AM

And don’t forget that she QUIT her job as Governor of Kansas halfway thru her term.

Del Dolemonte on September 15, 2011 at 10:22 AM

How did she get elected in that red state?

WashJeff on September 15, 2011 at 10:25 AM

The next President in 2013 will need a big “Undo” button. We can delete the “Reset” button.

the_souse on September 15, 2011 at 10:26 AM

Throw the whole lot of them in federal prison… This is patently unsatisfactory!!

Khun Joe on September 15, 2011 at 10:26 AM

would be a fiscal disaster. The administration blatantly ignored those warnings

That seems to be a theme with this regime.

rbj on September 15, 2011 at 10:27 AM

They don’t care. They will give away goodies galore, and print money to pay for them if they have to. In the name of “compassion”. Their vision of social justice trumps everything. They truly believe money grows on trees.

Paul-Cincy on September 15, 2011 at 10:32 AM

AZCoyote on September 15, 2011 at 10:23 AM

Several friends lambast me when I don’t produce my oldman discount card at events etc. “Why don’t you take the discount?” I just tell them I don’t think the strangers at the next table should pay my way. I cut that card up a few years ago.

Limerick on September 15, 2011 at 10:32 AM

“To advance the president’s healthcare agenda, it appears a deliberate effort was made by administration officials to hide CLASS’s true cost from lawmakers and the public,”

 
Thank goodness this isn’t a trend.

rogerb on September 15, 2011 at 10:33 AM

Pelosi: Pass the bill so that you can see what’s in it!

The administration blatantly ignored those warnings and continued to brazenly count CLASS as a cost-saving measure within Obamacare.

Spending money is cost-saving.

Tax cuts are government spending.

Medicare funding cuts “pay for” ObamaCare.

Oceania is at war with Eastasia and allied with Eurasia. Or maybe vice versa, or something like that.

And if we love Obama, we’ll pass his jobs bill.

All hail Big Brother, our doubleplusgood HopenChange President.

/ObamaSpeak off

Steve Z on September 15, 2011 at 10:33 AM

I need some enlightenment about this whole monstrous lie. Wasn’t it passed through a process called reconciliation because it did not add to the cost of the budget? Since Obama and the Communist Democrats lied like a rug about the cost of everything in it wouldn’t that make it not legal since it was passed by fraud and deceit? In the real world if documents are altered and misrepresented the whole thing is voidable. To me this thing is illegal without going to the SC. Someone?

Marco on September 15, 2011 at 10:34 AM

And don’t forget that she QUIT her job as Governor of Kansas halfway thru her term.

Del Dolemonte on September 15, 2011 at 10:22 AM

Could the Wizard of Oz PLEASE make a tornado and blow her back to Kansas? Would she melt if we threw water at her?

Steve Z on September 15, 2011 at 10:36 AM

And don’t forget that she QUIT her job as Governor of Kansas halfway thru her term.

Del Dolemonte on September 15, 2011 at 10:22 AM

Tiller murdered many of his little victims through partial-birth abortion. His church (ELCA) rewarded his ‘efforts’ by making him an ELDER! Sebelius thought all of that was just peachy. That’s a much more serious issue than her quitting. Yeah-Palin quit. Yeah-I think it was the wrong thing to do-but but her commitment to the unborn is beyond reproach.

annoyinglittletwerp on September 15, 2011 at 10:44 AM

“To advance the president’s healthcare agenda, it appears a deliberate effort was made by administration officials to hide CLASS’s true cost from lawmakers and the public,”

Oh, like Solyindra?

And “Fast and Furious”?

Is there a pattern here regarding advancing an “agenda”?

GarandFan on September 15, 2011 at 10:45 AM

Failbama never gave a crap. He only cares about how things look for him and other people have to worry about cleaning up his disasters.

He thinks crushing us under confiscatory taxes is the right thing to do, when he thinks at all.

dogsoldier on September 15, 2011 at 10:48 AM

“To advance the president’s healthcare agenda, it appears a deliberate effort was made by administration officials to hide CLASS’s true cost from lawmakers and the public,” Sessions said.

Officials? What officials. Why aren’t officials never named? Name them and call them to testify before Congress because it’s the only way these backround players are going to be leary of doing this stuff again.

Vince on September 15, 2011 at 10:48 AM

Congress had to pass it so we could know what was in it…isn’t that what san Fran Nan told us?

And the Dems and the White House knew exactly what was in it long before it even reached the floor of the House.

This is no accident or oversight.

All of this is intentional.

Create a crisis, a major crisis, and get people to believe the meme that only government can solve the problem and end the crisis, and voila…national socialized health care.

It really is simple to understand once you lower your standards and try to think like the Obamatrons who foisted this mess on all of us.

coldwarrior on September 15, 2011 at 10:50 AM

These incompetent gangsters are knowingly and willingly driving us into bankruptcy and ruin . . . wake up American before this once great Republic is nothing but a memory.

rplat on September 15, 2011 at 11:11 AM

“Seems like a recipe for disaster to me,”

I’m sure Obama, Pelosi, Reid & Company can publish a ten-volume cookbook series just bursting with such “recipes.”

Logic on September 15, 2011 at 11:11 AM

When will people start understanding what really is going on?
How many examples do people need to see that Obama is intentionally destroying our economy and our country’s solvency?
Why would any right thinking person claim that the Obama administration willfully ignored the fiscal insolvency of the program when this occurs every time?
Obama does this repeatedly, constantly, and to mammoth proportions.
These are features of Obama’s programs, not bugs.
Wake up, folks.

GaltBlvnAtty on September 15, 2011 at 11:14 AM

but the new GOP report shows that HHS officials warned for months even before passage that the CLASS Act would be a fiscal disaster. The administration blatantly ignored those warnings and continued to brazenly count CLASS as a cost-saving measure within Obamacare.

I have thought for a long time Obama and Co. are intentionally(and doing a good job) bringing our country down. How can this be incompetence, ideological, etc.?

Herb on September 15, 2011 at 11:21 AM

“To advance the president’s healthcare agenda, it appears a deliberate effort was made by administration officials to hide CLASS’s true cost from lawmakers and the public,” Sessions said.

No excuse. You’re lawmakers. You could/should do your OWN HOMEWORK.

bridgetown on September 15, 2011 at 11:24 AM

You’re lawmakers. You could/should do your OWN HOMEWORK.

bridgetown on September 15, 2011 at 11:24 AM

But law makin’ is hard. /

coldwarrior on September 15, 2011 at 11:53 AM

The Community Living Assistance Services and Supports program, or CLASS, became law in March 2010 as a part of Obamacare. Since PPACA passed, CLASS has drawn extensive criticism, with Democratic Sen. Kent Conrad, for example, calling it “a Ponzi scheme of the first order” and Health and Human Services Secretary Kathleen Sebelius conceding the program is “completely unsustainable” — but the new GOP report shows that HHS officials warned for months even before passage that the CLASS Act would be a fiscal disaster. The administration blatantly ignored those warnings and continued to brazenly count CLASS as a cost-saving measure within Obamacare.

Ponzi scheme? I just reported Sen. Conrad to Attack Watch.

Ward Cleaver on September 15, 2011 at 12:00 PM

But work on CLASS continued, bolstered by a report for AARP that laid out scenarios for implementing the plan. The AARP study also raised financial concerns, although the seniors’ lobby supports CLASS.

In other words, AARP is saying:

It’s going to fail miserably, but LET’S DO IT ANYWAY!!!!

UltimateBob on September 15, 2011 at 12:03 PM

Every time I read these stories, I hear those famous last words;

“We have to pass the bill to find out what’s in it” – Nancy Pelosi

Makes me sick to my stomach to think what we haven’t found in the bill yet. Maybe buried in the notes are how Obama is going to be put on display in the National Mall ala Lenin when he dies!

All Hail Comrade Obama!

Spit!

JohnnyD on September 15, 2011 at 12:23 PM

The Community Living Assistance Services and Supports program, or CLASS, became law in March 2010 as a part of Obamacare. Since PPACA passed, CLASS has drawn extensive criticism, with Democratic Sen. Kent Conrad, for example, calling it “a Ponzi scheme of the first order” and Health and Human Services Secretary Kathleen Sebelius conceding the program is “completely unsustainable”

1. Conrad voted for the bill. He is either lying about his position, or he is incompetent as an election official (doesn’t know how to read legislation). Goner.

2. Sebilius. Good lord. Well then Kate, it looks like you need to issue a waiver that excludes any expenditure or enforcement of the CLASS act provisions. The “Secretary shall determine……” and all that.

BobMbx on September 15, 2011 at 1:02 PM

I wonder if any of Dems have any sense of loyalty and/or responsibility to the legislative branch that would result in them saying they won’t put up with being misled by the administration anymore. I am thinking that Manchin, Landrieu, Warner, Pryor, or others from less blue states might have to stand up and say enough already.

Ironwood297 on September 15, 2011 at 1:18 PM

This is the first time I have heard of CLASS.

Just remember, there are 2,000+ pages of this crap.

tommer74 on September 15, 2011 at 2:41 PM