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CLASS Act Repeal Vote Approaching in the House

The House of Representatives is expected to vote today on H.R. 1173, the Fiscal Responsibility and Retirement Security Act of 2011. This bill would repeal the CLASS Act, Obamacare’s new long-term care entitlement.

The Americano / The Heritage Foundation. The House of Representatives is expected to vote as early as tomorrow on H.R. 1173, the Fiscal Responsibility and Retirement Security Act of 2011. This bill would repeal the CLASS Act, Obamacare’s new long-term care entitlement. The CLASS Act is just another reminder that the entire health care law is flawed and unworkable.

As noted by Heritage policy analysts, the CLASS Act is doomed to fail. It was created as a budget gimmick to help Obamacare pass. This is due to the illusion that CLASS produces a short-term deficit reduction as the government collects premiums for five years (2012–2016) before it begins paying benefits.

In addition, CLASS has an unsustainable structure. It is a voluntary “insurance” program that must offer coverage to every applicant at a uniform rate. This setup leads to massive adverse selection, where only the sick or disabled will want to participate. As this causes premium costs to rise, fewer and fewer people will want to participate. This leads to what insurers call the “death spiral.” The only remedy would be to burden the taxpayers with either a taxpayer bailout or mandatory participation of all Americans in CLASS.

The CLASS Act is simply bad policy. Even the Secretary of Health and Human Services (HHS) can’t seem to figure out how to get it to work, calling it “totally unsustainable” and “financially unsound.” HHS has had to shelve the program—at least for now.