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We’ve had a damaging demonstration of two related major failures of the current administration: 1. the obstinacy of Barack Obama and 2. the failure of government price setting. They combined in the confusion over a section of ObamaCare called the CLASS Act (Community Assisted Living Services).
The Department of Health and Human Services (HHS) finally decided earlier this month to give up on the CLASS Act. It entailed a voluntary insurance plan to aid the old and disabled to pay for long-term care, including care in a nursing home.
But so attached is Obama to the health-care boondoggles that he can’t bear to part with one that even his own HHS admits is a catastrophe in the making.
It was doomed to fail. This was because of a special form of price control on the premiums. Each applicant’s premiums were set on the “average” applicant’s risk of needing such long-term care. One premium to fit all, as if everyone’s risk is the same in government’s glazed eyes. But, surprise! We’re not all the same.
Because few people with below-average risks would enroll, the average premium inevitably would rise. More people with below-average risks would continue not to enroll until the system eventually would fall apart.
The program’s primary purpose in the law was to pump up financing for ObamaCare. It would have collected premiums for five years before paying any benefits at all. The asinine program initially was to pay for $86 billion of the health overhaul law’s cost.
There was never evidence that CLASS could ever be sustainable. Any analyses on the concept before its passage would have concluded that CLASS was hopeless. The White House, the CBO, and Democrats in Congress all had to know this from the start.
It’s impossible to run a long-term care benefit unless millions upon millions of healthy Americans are forced to pay premiums somewhere up to $200 monthly–for a benefit they don’t want.
If the U.S. Supreme Court upholds ObamaCare’s individual mandate as constitutional and if the president were to be re-elected—God forbid—the administration would undoubtedly revive CLASS and mandate that everyone had to participate. That’s why it is imperative to repeal CLASS in this Congress, Republicans maintain.
Even if premiums were more reasonably priced, Medicare chief actuary Rick Foster said that 230 million Americans–more people than are in the entire American workforce–would have to participate for the system to work.
The House Energy and Commerce Committee scheduled a hearing for Oct. 26 to find out why the administration took nearly two years to admit that CLASS was unsustainable.
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