(May 19, 2009 email From Richard Foster, Office of the Actuary, Centers for Medicare & Medicaid Services to Obama Administration officials). 

(July 9, 2009 email from Richard Foster to Obama Administration officials).

(Obama Administration Health & Human Services email dated October 22, 2009).

And what if you knew this program contained egregious budget gimmicks that were designed to mask the fiscal disaster described above and to not only hide these facts from the American people but to use this budget gimmick to pass another large financially disastrous entitlement program?

This is the situation that the Obama Administration and Congressional Democrats were facing when they included the CLASS Act (a new long term care program designed by Senator Teddy Kennedy) as part of ObamaCare.  Did they come clean about the problems with the CLASS Act, its budget gimmicks and the long term fiscal nightmare it would pose on the American Taxpayer? No. Instead, Democrats like Senator Dick Durbin (D-IL) and disgraced Senator Chris Dodd (D-CT) stood on the floor of the United States Senate and outright lied to the American people.

What a video compiled by the House Energy & Commerce Committee in their oversight investigation into the fraud perpetrated against the American people here:

You can also read a complete report about these issues, here.

Earlier this week, the House Energy & Commerce Committee voted 33 to 17 in favor of legislation to replace the CLASS Act, ObamaCare's unworkable long-term care "insurance" program. In a press release, Rep. Fred Upton (R-MI), Chairman of the Committee, stated "“None of us was surprised when HHS announced that it could not implement the CLASS program. Well before it was signed into law, actuaries and policy experts questioned the viability of the program, but it made it into the healthcare law anyway, giving the false impression that the law cost $80 billion less than it actually did."  Upton also stated: “we must erase a program that we know will not work; a program that was never structured to work, and that we could never afford.”

Earlier this year, HHS announced it could not implement the CLASS Act given the rule of solvency imposed on the program in an amendment offered by retired Sen. Judd Gregg (R-NH).

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Michael Cannon of the Cato Institute has published a very fine critique of the CLASS Act and the political spin of its demise by the supporters of ObamaCare.  Cannon explains how the CLASS Act program would have ended up in a death spiral, stating:

"Congress required CLASS to set each applicant’s premiums according to the average applicant’s risk of needing such long-term care, rather than her individual risk. But averaged premiums are only attractive to people with above-average risks. Since few people with below-average risks would enroll, the average premium would rise. That would encourage more people with below-average risks not to enroll, and the vicious cycle would continue until the program collapsed."

Even in the wake of CLASS's demise (a demise that came as no surprise to many), ObamaCare's supporters have said this points to the strength of ObamaCare. Their logic boils down to something like this: "unlike CLASS, ObamaCare avoids a death spiral because it forces everyone to buy health insurance at prices they would not otherwise accept, raises taxes to feed the system, and imposes price controls."  Cannon suggests that the rest of ObamaCare should be held to the same standard as CLASS - let the rest of ObamaCare be measured by whether it can live without mandates, taxes and government price caps. 

Read Cannon's article here.

For further reading on the CLASS Act, we recommend Charles Blahous' article, "How the CLASS Act's Demise Ends the Fiscal Argument for the 2010 HealthCare law.

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The Washington Examiner has put together a nice little montage containing Senate Democrat after Senate Democrat making promise after promise about the solvency of ObamaCare's CLASS Act. Their problem is that last Friday, HHS Secretary Sebelius admitted what most Americans (but no Senate Democrat) knew - that the CLASS Act was fiscally reckless and totally unsustainable.

In watching the video, in light of Sebelius' comments, you quickly realize every Democrat in the video was lying about a key provision of ObamaCare.

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The Obama Administration is finally publicly admitting what critics of ObamaCare have known about the CLASS Act (the new long-term care entitlement program created in ObamaCare) prior to ObamaCare passing Congress - that the program was completely unsustainable.

On October 14, 2011, HHS Secretary Kathleen Sebelius notified Congress that the there was no "viable path forward for CLASS implementation at this time." She also indicated that the program would be suspended indefinitely.

The Congressional Budget Office had originally advised Congress that the CLASS Act would increase federal revenue by $86 billion from 2012 to 2021 (critics correctly called this a budget gimmick in ObamaCare because this provision would collect revenue in the short term while the major costs of the CLASS Act would occur in the out years).  With the suspension of the CLASS Act, ObamaCare will lose that "revenue" that helped give ObamaCare the appearance that the law was budget neutral.  

This comes on the heals of Congress repealing ObamaCare's 1099 reporting provision that was also supposed to produce $17 billion in revenue over 10 years.  As a result, ObamaCare has lost $103 billion in revenue over the past 18 months and the law is not even scheduled to take effect for another 27 months. This shows that the financial footing of ObamaCare will not be budget neutral and makes it even more imperative that Congress repeal the law.

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New developments in Washington suggest the Obama Administration may be shutting down ObamaCare's long-term care insurance program, the CLASS Act.  The program is a voluntary program that would allow people to buy another form of government insurance.  Critics of the program rightly point out that the CBO score for the CLASS Act was nothing more than a budget gimmick (CBO scored the first ten years of the program in which federal revenue is high while compared to benefit pay-outs. Overtime, the program was not fiscally sound as the long-term expenditures would far out-pace revenue).  The initial CLASS Act revenue was used to offset the up-front costs of ObamaCare and was likewise a budget gimmick.

Avik Roy at the Apothecary details that the CLASS actuary, Bob Yee, sent out an email suggesting HHS was shutting the program down because they could not make the numbers work.

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Brian Blase of The Heritage Foundation has an excellent commentary on the CLASS Act.  The following is an excerpt from his piece:

"The American Academy of Actuaries, a collection of serious nonpartisan number crunchers has decried CLASS as unsustainable. The central reason: CLASS is a guaranteed-issue program (i.e., all who apply for coverage must be accepted) that bans underwriting (i.e., premiums cannot vary based on health status). This means that healthy individuals with a relatively low risk of needing future long-term care services will find CLASS premiums to be more expensive than similar private-sector insurance products."

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Nina Owcharenko of The Heritage Foundation has laid out a road-map for what real healthcare reform would look like - after Congress repeals ObamaCare.  The ideas will constitute real reform, expand consumer choice, truly bend the cost curve downward and lower the deficit.  The ideas include:

• Tax Reform: Extend individuals the same tax benefits that businesses have when providing insurance to their employers.  This policy undermines portability.  By making this change to the tax code individuals would control their own healthcare and the loss of a job would not result in the loss of insurance.  
• Entitlement Reform: convert Medicare and Medicaid from defined-benefit plans. For Medicare, retiring seniors could keep the insurance they have and the government would provide defined contribution premium assistance to seniors who qualify.  For Medicaid, the government could also provide direct assistance to enrollees to purchase private health insurance.  This would be particularly beneficial to people who waiver back and forth between Medicaid eligibility: the premium assistance might phase out but individuals wouldn't lose their private insurance and wouldn't have to switch doctors.
• Insurance Market Reform: Congress should take a number of steps to remove barriers to a flexible insurance market that serves the consumers, including allowing the purchase of insurance across state lines and by extending protections to people who switch from one individual plan to another (according to Owcharenko, this coverage is available to people who go from employer plan to individuals, vice-versa and from an individual to employer plan but not an individual plan to an individual plan).
• State Reforms: Congress should start by giving states more flexibility and, for their part, states should roll back mandates and costly regulations and also engage individuals in Medicaid to take a greater roll in the decisions affecting their healthcare.