Health Care


The End of CLASS

October 24, 2011

I have a new article in The Weely Standard on the recently canned part of Obamacare called CLASS:

CLASS (for Community Living Assistance Services and Supports) is a voluntary long-term care insurance program that hitched a ride on Obamacare. The program was set up to charge participants premiums for at least five years before they became eligible for benefits​—​meaning that, as the program commenced, there would be several years of premium collection before any meaningful expenditure.

This turned out to be awfully convenient timing for the White House, as it created the perception of a $70 billion, 10-year CLASS surplus that was used to make Obama-care’s overall books look better.

Counting CLASS in the Obamacare totals was an abuse for two reasons. First, as Ryan pointed out, the same dollar can’t be spent twice. But that’s exactly what the White House wanted to do. They said CLASS’s $70 billion surplus could be used both to pay for Obamacare and to liquidate CLASS Act obligations after ten years.

That was bad enough. But the problem was even worse because CLASS itself was a ticking budgetary time bomb, and the administration knew it.

You can read the whole article here.

posted by James C. Capretta | 11:28 am
Tags: CLASS
File As: Health Care

World CLASS Contortions

And so the CLASS Act whitewash begins.
October 20, 2011

Ever since the Obama administration announced last Friday — in the late afternoon — that it was “suspending” implementation of the CLASS (Community Living Services and Supports) Act, Obamacare’s apologists have been twisting themselves into knots to explain away this embarrassing episode as no big deal.

Leading the way has been Washington Post blogger Ezra Klein. In his account of CLASS’s demise, Klein suggests that the voluntary long-term-care-insurance program ended up in Obamacare pretty much by happenstance, and certainly through no fault of any living Democrat (he points the finger mainly at the late Sen. Ted Kennedy). Klein says the Obama White House was actually publicly cool to the program — and privately hostile. Indeed, according to Klein, the most important reason the program stayed in the final bill was Republican senator Judd Gregg’s amendment, offered in committee, which required the Secretary of HHS to certify that the program could be financed on a self-sustaining basis from participant premiums before it could be launched. Once that amendment was adopted, the budgetary arguments that had been raised against CLASS had been addressed, and then inertia and an unwillingness to undo Senator Kennedy’s final legislative initiative led to its eventual enactment.

Klein also suggests that last week’s White House decision to suspend CLASS implementation is not evidence of failure. Rather, it’s a sign of fiscal sobriety and an unyielding commitment to implementing only what works, and not what doesn’t.

Finally, with regard to the Congressional Budget Office, which estimated in March 2010 that CLASS would produce a $70 billion surplus over the first ten years of Obamacare, Klein again sees no reason for finding fault. Yes, CBO said there would be a short-term surplus from CLASS, but they said all along that there would be long-term deficits from the program too, which the administration has now confirmed. Therefore, Klein concludes, CBO was essentially right about CLASS all along, and the rest of its Obamacare estimate can be trusted to be accurate as well.

Based on Klein’s account of what transpired, one might be tempted to hold up the whole CLASS episode not as a failure, but as a perfect example of good liberal governance. Certainly the New York Times sees it that way. This week, the editors praised the administration for its “wise” but difficult decision to kill the program.

And yet, it’s hard to shake that nagging feeling that Klein and the New York Times haven’t quite gotten this story right. And why is that?

Perhaps it’s because there was never any shred of evidence that CLASS could ever be made sustainable. Not before enactment, and not since. Indeed, any fair reading of the analyses that were done on the concept prior to its passage would conclude that CLASS was hopeless. And it wasn’t a close call. The program was so far from being actuarially sound that it could never be fixed without fundamentally changing how it worked. It is simply not possible to pay a pay-as-you-go long-term-care benefit to the disabled unless millions upon millions of healthy Americans are forced to pay premiums somewhere in the range of $100 to $200 monthly — for a benefit none of them really wants. There was no way the Obama administration was ever going to propose this, because to do so would have been political suicide.

And so, instead, it chose to pretend that a solution might be out there, somewhere, despite all evidence to the contrary.

This was rather convenient for the White House because, as it happened, the $70 billion in supposed CLASS Act “surplus” was just what the doctor ordered for making the deceptive argument that Obamacare was good, not bad, for the federal budget. More than half of the deficit reduction claimed for the final bill came from those bogus CLASS savings. That turned out to be key in convincing the final wavering Democrats to vote yes on the legislation.

CLASS’s enactment was no accident of a chaotic and uncontrolled legislative process. It was a deliberate and cynical ploy to put a phony veneer of fiscal restraint on top of a massive tax-and-spend program. The administration and its allies certainly knew all along that a day of reckoning would come. But they didn’t care; they staked so much on the passage of Obamacare that they had a win-at-any-cost mentality. And now that they have admitted that tens of billions of dollars in deficit reduction that they promised will never materialize, they aren’t the least bit apologetic.

What remains most perplexing in this whole episode is why CBO played along with the CLASS charade. They had access to all of the same actuarial data as everyone else. Their own numbers showed the program was unstable beyond ten years. The Gregg amendment gave them the perfect excuse to conclude that CLASS would never be launched because it could never be viable without massive taxpayer subsidies. And yet they kept showing the $70 billion ten-year surplus in their estimate.

Among the many questions about this sorry episode that are worth pursuing, the role of CBO is surely one.

[Cross-posted at National Review Online.]

posted by James C. Capretta | 3:38 pm
Tags: CLASS Act
File As: Health Care

The Reconciliation Option

October 18, 2011

Over at National Review Online, I have a new column up on a special budgetary procedure known as “reconciliation,” which was mentioned by Mitt Romney and Rick Santorum at last Tuesday’s Republican presidential debate as an option for repealing Obamacare:

If, in the 2012 election, Republicans are able to maintain control of the House, pick up the majority in the Senate (a real possibility) but not a 60-vote supermajority, and win the White House (looking more possible by the day), the GOP would be in position to set in motion a reconciliation bill to repeal and replace Obamacare — and they wouldn’t need any Democratic cooperation to make it happen. The fact that leading Republican presidential candidates have now said that reconciliation is an option is a big deal, as it makes it very clear to all concerned that there is a clear path to victory for Obamacare opponents.

Seeing the threat that the reconciliation option could pose, Obamacare’s apologists have responded by suggesting it would be the height of cynical partisanship for Republicans to undo Obamacare in this fashion, since reconciliation supposedly played only a minor role in the enactment of Obamacare. Obamacare’s defenders also claim that, in any event, the GOP may not be able to pull it off because some aspects of Obamacare are non-budgetary and therefore aren’t eligible for repeal in a reconciliation measure, which is supposed to deal exclusively with budgetary matters. Sen. Kent Conrad, the Democratic chairman of the Senate Budget Committee, took the argument further and said that using reconciliation for repeal would be inappropriate because reconciliation is supposed to be used fordeficit-cutting efforts — and Obamacare’s full repeal would increase the deficit, according to the Congressional Budget Office (CBO).

As usual, there’s a lot of smoke and misdirection in these arguments, and not much clarity....

You can read the whole column here.

posted by James C. Capretta | 1:01 pm
Tags: Obamacare, repeal and replace, reconciliation
File As: Health Care

No Entitlement Reform in the Presidentís New Proposal

September 26, 2011

I have a new column up at e21 on the president’s latest budget proposal:

This plan wasn’t aimed at building bridges to the GOP or helping the Joint Committee come to an agreement. It was aimed at drawing sharp contrasts between the parties and positioning the president going into the 2012 presidential campaign. In that regard, it seems to have worked. The already very wide partisan divide now prevalent in Congress only widened further in the last week. In this highly charged environment, the odds that the Joint Committee will come to a grand tax-entitlement bargain are exceedingly low.

But perhaps that is just as well. Because it is also quite clear from the president’s latest health care proposals that serious entitlement reforms — the kind that would actually make a difference and would be worth striking a “grand bargain” to achieve — aren’t in the cards before the November 2012 election....

You can read the column in full here.

posted by James C. Capretta | 12:31 pm
Tags: entitlement reform, Joint Committee
File As: Health Care

The Presidentís Bad Budget Moves

September 22, 2011

I have a new column up at National Review Online on why the president’s actions on the budget are bad for himself and the country:

...inexplicably, the president has decided once again that he would rather preserve his political talking points for 2012 than achieve bipartisan legislation. There is no other way to interpret his highly partisan proposals on jobs and the budget. Once again, his speeches and legislative initiatives have earned hallelujahs from the liberal faithful, but they have doomed the prospects for bipartisan compromise. Indeed, it’s clear from the president’s threat to veto any deficit-cutting legislation that doesn’t raise taxes that he wants the supercommittee to fail. And the demise of the supercommittee would almost certainly mean there won’t be any jobs package either....

You can read the whole piece here.

posted by James C. Capretta | 11:33 am
Tags: President Obama, budget, jobs
File As: Health Care

Itís Not Just About the Individual Mandate

September 19, 2011 • I have a new Weekly Standard article on the need not to focus exclusively on the individual mandate in undoing Obamacare:

Obamacare’s individual mandate — requiring that all Americans purchase government-approved health insurance beginning in 2014 — has always been the law’s most vulnerable provision. It is incredibly unpopular, and not just among conservatives. Polls consistently show that a large majority of the electorate opposes it, including a good portion of registered Democrats....

[However], even if the Supreme Court were to strike down the mandate, much of the rest of the law would almost certainly remain in effect. That’s unacceptable. Obamacare without the mandate is nearly as bad as Obamacare with it.

In the end, the fate of Obamacare will almost certainly be decided in the political and legislative arena, not the courts, and the 2012 election is likely to be the decisive battle in that regard. Keeping this in mind, Republicans and conservatives should be doing all they can to make the 2012 election another referendum on the damage Obamacare will do to the American economy and health system....

You can read the whole article here.

posted by James C. Capretta | 2:04 pm
Tags: repeal, individual mandate, Supreme Court
File As: Health Care

The Case for Competition in Medicare ó A New Backgrounder

September 14, 2011

I have a new background report available at the Heritage Foundation on why Medicare reform should be market-based:

Recently, proposals have been advanced that would bring market discipline to Medicare by converting the program into fixed premium assistance instead of an open-ended, defined-benefit entitlement. These reforms are designed to harness the power of competition to increase efficiency in the Medicare program.

These reform plans have met with fierce criticism in some quarters. A primary argument of opponents is that government-led efforts will work better than competition to control costs without compromising the quality of care for patients. However, a careful review of the history of Medicare and other programs shows that this criticism is wrong. Competition can bring more discipline to the program, whereas the alternative—top-down price controls—will seriously erode the quality of care that seniors and other patients receive....

Read the whole report here (in PDF here).

posted by James C. Capretta | 4:48 pm
Tags: Medicare, markets
File As: Health Care

Tinkering With What Works in Medicare

September 13, 2011

I have a new report up at The Heritage Foundation on efforts to tinker with the Medicare Part D drug benefit program: 

Over the past several years, one small corner of America’s vast entitlement superstructure — the Medicare drug benefit — has been working well, satisfying program participants, and holding cost growth to a bare minimum. This is unheard of in the entitlement arena, where cost overruns are the norm. Naturally, encountering that kind of success, some politicians — especially those who had nothing to do with making sure it was properly designed — now want to change it....

You can read the whole article here (PDF here).

posted by James C. Capretta | 2:56 pm
Tags: Medicare, Medicare Part D
File As: Health Care

On the Presidentís Speech: Got Jobs?

September 9, 2011

National Review Online has convened a panel to respond to the president’s jobs speech last night. Here was my response:

Let’s get this straight: The president, now in his third year in office, is worked up with righteous indignation because Congress hasn’t done enough on jobs. Really?

During his first two years in office, he had commanding majorities in the House and Senate. He could have passed just about any kind of economic agenda he wanted. What did he do? He passed an $800 billion stimulus bill that didn’t work and then spent a year and a half passing the most controversial and burdensome entitlement expansion in half a century. That’s pretty much the entire Democratic economic agenda.

Now he has the audacity to suggest that Congress is to blame for not doing more? And, in the middle of yet another highly partisan presidential lecture, that anyone who opposes his failed approach to job creation is somehow doing so for partisan reasons?

That kind of speech may make the president and his partisan supporters feel better for a week or two, but it won’t produce bipartisan legislation that might actually help the country. What the president should be aiming for is real results for voters. That’s the only thing that can save him now. Instead he chose more partisan posturing. The result is that he will almost certainly go into 2012 with the worst economic record for a first-term president in modern history. Good luck with that.

You can read the whole panel here.

posted by James C. Capretta | 2:13 pm
Tags: President Obama, jobs
File As: Health Care

A System in Need of an Update

September 7, 2011

The New York Times Room For Debate series has a new question up, asking, “Can the Middle Class Be Rebuilt?,” in which I offer this response

The United States, and our Western capitalist partners, have entered a new economic era. Intense global competition has suppressed wages in some industries that had uncompetitive cost structures. And because political leaders of both major parties have for far too long emphasized consumption and income protection at the expense of investments in the future, the adjustments necessary to provide new opportunities to replace lost employment have been slow and inadequate.

Meanwhile, as economic pressures have intensified, it’s become clear that the social welfare arrangements built decades ago by governments and employers are no longer viable, especially in view of the unprecedented demographic transformation — rapid population aging and slow or stagnant labor force growth — now underway in the industrialized world.

There’s no retreating from these challenges, especially global competition. What policy makers must do is get the policy fundamentals right again so that dynamic economic growth in the private sector can once again generate new opportunities for the middle class....

You can read the whole response here.

posted by James C. Capretta | 10:55 am
Tags: middle class
File As: Health Care

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