Another Obamacare Debacle: CLASS Crashes

October 15, 2011 – The demise of CLASS, a long-term insurance program, is another example of how the Obama and the Democrats, in their rush of make history, failed to think through the financial implications of consquences of key provisions in Obamacare.

The Obama administration yesterday pulled the plug on a major program in the president's health law – a long-term care insurance plan dogged with doubts over its financial solvency. Known as CLASS, the Community Living Assistance Services and Supports program was a long-standing priority of the late Massachusetts Democratic Sen. Edward M. Kennedy.

The program became a major casualty in the health care law war. It was scheduled to launch in 2013.

Although government sponsored, it was supposed to function as a self-sustaining voluntary insurance plan, open to working adults regardless of age or health. Workers would pay an affordable monthly premium during their careers and could collect a modest daily cash benefit of at least $50 if they became disabled later in life. The money could go for services at home or to help with nursing home bills.

But a central design flaw dogged CLASS. Unless large numbers of healthy people willingly sign up during their working years, soaring premiums driven by the needs of disabled beneficiaries would destabilize it, eventually requiring a taxpayer bailout.

Obama officials said they discovered they could not make CLASS both affordable and financially solvent while keeping it a voluntary program open to virtually all workers, as the law also required.

Nearly a year before the health care law passed, Richard Foster, head of long-range economic forecasts for Medicare warned administration and congressional officials that CLASS would be unworkable. His warnings were disregarded, as Obama declared his support for adding the long-term care plan to his health care bill