Saturday, October 15, 2011

Obamacare Implosion

Yesterday, a portion of the Patient Protection and Affordable Care Act (ususlly called "Obamacare") went up in smoke. The portion of the bill that dealt with a long-term care insurance--the CLASS program--was basically tabled, since it had become apparent that the program was not fiscally sound. Katherine Sebelius, HHS Secratary, on the issue:
"For 19 months, experts inside and outside government have examined how [the Department of Health and Human Services] might implement a financially sustainable, voluntary and self-financed long-term-care insurance program under the law," Sebelius wrote. "But despite our best analytical efforts, I do not see a viable path forward for CLASS implementation."
Now, the legislation establishing the program is still there, HHS has simply decided--with the approval of the administration--to not implement it. That's a strange thing, in my mind. The legislation was passed, it's the law of the land, but the government is going to ignore a portion because it doesn't make sense to do it? Representative John Thune sees the problem here, too:
"Simply setting aside the program for the near term is not enough," said Sen. John Thune (R-S.D.). "Repeal is the only solution to ensuring American taxpayers will not be on the hook in the future for this disastrous entitlement."
And this all begs the question, why was the program included in the legislation, if--for 19 months--everyone involved has apparently known there were major problems in it?

The answer is very clear. Obama touted his healthcare package as financially sound, as something that would not increase the debt but would--instead--decrease the debt. And as the WSJ points out, it was the supposed revenue stream from the CLASS program that made such a claim possible:
Democrats engineered the program known by the acronym Class with front-loaded premiums and back-loaded benefits so that on paper it threw off a lot of revenue early on but then bankrupted itself later. This design made it possible for the Congressional Budget Office to score the program as a money-raiser during its first decade and thus make ObamaCare look like it reduced the deficit. And sure enough, CBO, in its final estimate at passage, said that Class would reduce the deficit by $70 billion through 2019—or more than half the bill's supposed $124 billion 10-year "savings" to the federal fisc. Well, goodbye to all that.
Get that? It's another case of accounting tricks being used to mask the reality. The CBO knew the program was a ticking bomb, knew it would implode down the road, but it still willingly went along with the administration by scoring the CLASS program as a revenue generator. And as we can see, this "revenue" represents over half of the saving that Obamacare was supposed to produce.

So what we have here is a fiscally unsound program that was used to trumpet the fiscal responsibility of the overall plan it was a part of. And if the SCOTUS ultimately rules against the Constitutionality of mandated insurance purchases in the bill? There goes the rest of the imaginary revenue. And then some.

Cheers, all.

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