Maggie's Farm

Only a year too late to recognize the blatantly cooked numbers used to justify the passage of ObamaCare, the New York Times can’t avoid reporting the awakening because the Obama administration had to fess up to the new Congress.

In March 2010, I wrote about ObamaCare’s CLASS Failure. CLASS is ObamaCare’s long term care program, the Community Living Assistance Services and Supports Act. The primary motivation for its inclusion in ObamaCare was to game the Congressional Budget Office’s calculation of budget gains from ObamaCare.

The best objective and factual summary and analysis of CLASS I’ve found is that by one of the preeminent global consulting firms on benefits, Towers Perrin.

“The Senate version is projected to bring in $72 billion, with an average monthly premium of $123. The initial positive cash flows come, of course, from the five-year period before participants vest, when premiums are paid but benefits are not. Tens of billions are foreseen to flow into the trust fund during those five years. In later decades, however, the flows would turn negative and increase the federal deficit.”

Well, guess what?

HHS Secretary and chief commissar of ObamaCare now admits the CLASS program was flawed from the inception and requires major overhaul. CLASS, reports the New York Times, “is too costly to survive without major changes, Obama administration officials now say.”

To make the program viable, Ms. Sebelius said, she is considering changes in the eligibility criteria, including employment and earnings requirements, to ensure that only active workers may enroll. She also said she favored adjusting premiums to rise with inflation.

Even then, experts say, CLASS will fail, in what is called an insurance death spiral: premiums rise to meet costs, which drives away the healthier, leaving those more likely to use the benefits, and further increase costs, further driving away the healthy and those unable to afford premiums, leaving a yet higher proportion most likely to need benefits, and so on.

Richard S. Foster, the chief actuary at the federal Centers for Medicare and Medicaid Services; Alicia H. Munnell, director of the Center for Retirement Research at Boston College; and leaders of the American Academy of Actuaries all said the program would be unstable if, as expected, it attracts disproportionate numbers of people with health problems.

Mr. Foster said his analysis showed the program faced “a significant risk of failure” because people who are or expect to be sick or disabled were more likely to sign up. In a study issued this month, Ms. Munnell, an economic adviser to President Bill Clinton, said more stringent work requirements and an effective national advertising campaign could help attract young, healthy people to the insurance pool.

Even so, she said, “premiums may never reach an affordable level for middle-class households,” so “the program faces enormous challenges.”

Mr. Obama’s debt-reduction commission, a bipartisan advisory body, said in its report late last year that Congress should “reform or repeal” the program.

“The program’s earliest beneficiaries will pay modest premiums for only a few years and receive benefits many times larger,” the panel said, “so that sustaining the system over time will require increasing premiums and reducing benefits to the point that the program is neither appealing to potential customers nor able to accomplish its stated function.”

Well now, there's another fine kettle of fish(iness) you've gotten us into, Obama.