Major Portion of Affordable Care Act Axed

[CAC1001]

Last Friday, the administration killed a major portion of the healthcare law, called CLASS, or the Community Living Assistance Services and Supports program (http://www.cbsnews.com/stories/2011/10/14/ap/health/main20120670.shtml ). Health and Human Services Secretary Kathleen Sebelius acknowledged that the program was simply not financially workable, this after months of saying the opposite, that they'd be able to make it work. Her department tried for nineteen months to figure that out, but couldn't. A big part of the reason why is that it was a voluntary program, and thus in order to be workable, a second mandate to the healthcare law would have been required.

An important thing to note however is that the CLASS program was one of the main deficit-reduction measures the Affordable Care Act employed. The CBO had estimated that the CLASS program would contribute about $80 billion towards deficit reduction, which now isn't going to happen.

To me, this goes back to the argument regarding the impossibility of actually figuring out the cost of big, complex pieces of legislation such as the AFA, no matter how honest and brilliant the people at the CBO are. The CBO scored the program as reducing the deficit. The proponents of the AFA criticize Republicans who want to repeal the AFA by saying that doing so will increase the deficit.

The Republicans pointed out that this cost was arrived at by relying on various assumptions, estimates, and so forth, and thus was untrustworthy. And here we see a prime example. It was assumed that the CLASS program would be workable (even though from the get-go, this had been called into question). By assuming it would be workable, the CBO estimated it would contribute to deficit reduction. But now we see that it is not workable, meaning it will not reduce the deficit, which means the CBO was incorrect.

Another point this makes for me is that the Republicans were criticized for questioning the integrity of the CBO. The Republicans never questioned the CBO's integrity (at least as far as I know). Their major contention was that no matter how honest, the CBO's claims simply were not credible because of the above (the assumptions, the estimates, the overall complexity and size of the bill, etc...).

The thing is, this now calls into question the entire bill I think. If a major mistake was made regarding how a major portion of the bill would contribute to deficit reduction, what other assumptions were made regarding other portions of the bill to make it seem cost-effective?

 

[WhoWee]

If we refer back to Nancy Pelosi's now famous line regarding passing the Bill - then find out the details. My guess is the CBO was only able to score the parts that were actually written - many specifics were not fully described in detail in the final Bill - were they?

 

[Vanadium 50]

The CBO pointed out the problem at the time. It only reduced the deficit because it collected taxes for ten years and paid benefits for five in the window that the CBO was mandated to evaluate it. This is what the Director said in 2009:

CBO estimates that the proposal’s net effect on the federal budget would be to reduce the budget deficit by about $58 billion during the 2010–2019 period, including some effects on federal revenues and Medicaid spending. In CBO’s analysis, the real (inflation-adjusted) average monthly premium was assumed to be $65, and the real daily benefit was assumed to average about $75. The estimated reduction in the federal budget deficit over the next 10 years is chiefly the result of the five-year vesting requirement; the payout of benefits would not begin until 2016, five years after the initial enrollment in 2011.

and later in that same document,

Overall, CBO estimates, if the Secretary did not modify the program to ensure its actuarial soundness, the program would add to future federal budget deficits in a large and growing fashion beginning a few years beyond the 10-year budget window. If the Secretary did act to ensure the program’s solvency, the program and its effects on Medicaid spending and revenues might—or might not—add to future budget deficits, depending on the specific actions that were taken.

The congressional leadership at the time knew that this would increase the deficit, and they asked the CBO to answer a very specific and misleading question to show otherwise, and the CBO answered it. But you can see that they tried to tell people that while they were legally obligated to answer the specific question asked of them - what would be the affect on the budget with 10 years of taxes and 5 years of benefits - they did try and alert people to the fact that this was a misleading question and that any savings were smoke and mirrors.

As expected, the only people that believed them or cared were those who were predisposed to oppose the bill anyway.

 

[DoggerDan]

Hate to say this, but I'm confused. Care to boil things down?

 

[WhoWee]

Hate to say this, but I'm confused. Care to boil things down?

In 2010 even CNN said CLASS was a gimmick. my bold

http://money.cnn.com/2010/03/20/news/economy/cbo_reconciliation/index.htm

"Create a new long-term care insurance program: The bill will create the Community Living Assistance Services and Supports Act to help seniors in need of help with daily tasks such as bathing and dressing. Those who enroll in the program will have to pay premiums into the program for five years before being eligible for benefits.

In the first 10 years, the program it is expected to take in more money than it pays out, which is why the CBO says it would reduce the deficit by $70 billion. But in the second decade and beyond, the program is projected to pay out more than it takes in, and will therefore contribute to the deficit.

That's why some say that the CLASS Act is a budget gimmick that will not contribute to the potential of health reform to reduce the deficit."
***

If we reflect back a moment - this Bill was sold (Obama, Reid, and Pelosi) as both the answer to the deficit and a jobs creator - wasn't it?
http://www.politifact.com/truth-o-m...-claims-health-care-reform-will-create-thous/
"The health care bill will "create 4 million jobs, 400,000 jobs almost immediately.""

"To be clear: Pelosi was not arguing that the bill would literally put people to work in the field of health care. Rather, she claims that cheaper health care will allow businesses to hire more workers, thus creating more jobs. "
***

http://www.reuters.com/article/2010/03/18/us-usa-healthcare-idUSTRE61O4NV20100318
"Obama said the healthcare bill, which has faced solid Republican opposition, represented "the most significant effort to reduce deficits since the Balanced Budget Act" of 1993."