Report Shows Administration Always Knew the CLASS Program Was Fiscally Unsustainable
Click here to watch the speech.
President Obama’s health care law established a brand new, federal long-term care entitlement program called the Community Living Assistance Services and Supports (CLASS) program.
Today, U.S. Senator John Barrasso (R-WY) discussed a report on the CLASS program released by a group of Senate and House Republican lawmakers, including Senator John Thune (R-SD).
The report highlights how the Administration intentionally designed the CLASS program as a budget gimmick in order to sell the President’s health care law. It also provides undeniable evidence that the Administration ignored warnings from its own Chief Medicare Actuary, Richard Foster, that the program was fiscally unsustainable.
Excerpts of Senator Barrasso’s remarks on the floor of the U.S. Senate:
“This CLASS program pays a stipend to individuals enrolled when they are unable to perform daily living activities – such as dressing, bathing, and eating.
“To qualify for the benefits, an individual would have to pay a monthly premium for five years before the federal government starts to pay out any of the benefits.
“Sounds pretty good, but not so fast. When it comes to the health care law, the American people have come to realize that if it sounds too good to be true, then it probably is.
“The CLASS program was supposed to start on January 1, 2011, so about 10 months ago. Obama Administration officials decided to delay the program because they know it doesn’t work.
“It is now known that the CLASS program was an intentionally designed budget gimmick.
“The Congressional Budget Office (CBO) estimated that the CLASS program would reduce the deficit by $70 billion over a 10 year period.
“These “savings” are mythical and they come from the premium dollars CLASS collects for the first5 years…
“Over its first 10 years, CBO says that this CLASS program will collect $83 billion in premiums, and will only pay out $13 billion in benefits.
“Instead of holding on to the $70 billion in excess premiums collected to pay for future expenses that we know are coming, well members of the Senate, members on the other side of the istle used those funds to pay for President Obama’s health care law.
“To add insult to injury, Washington Democrats then tried to claim that the $70 billion could also be used to pay down on the deficit.
“The American people immediately saw that this claim was irresponsible.
“Even the Senate Budget Committee Chairman, Senator Kent Conrad from North Dakota, admitted that the CLASS program was ‘a Ponzi scheme of the first order – something Bernie Madoff would be proud of.’
“Yet, the President and Washington Democrats pushed to include this CLASS program in the health care law.
“This new report provides undeniable evidence that Administration officials knew the CLASS program’s design and payment structure were fiscally unsustainable.
“The Obama Administration knew it and yet they repeatedly ignored the explicit and persistent warnings.
“This push to advance an agenda, rather than reasonable, patient-centered health care reforms, served only to create yet another unsustainable entitlement program. An entitlement program that this country simply cannot afford.
“The Obama Administration’s own Chief Actuary, a man named Richard Foster. He repeatedly tried to tell Administration officials that the CLASS program was not fiscally sound.
“Internal emails from Mr. Foster first warned Administration officials in May of 2009 – well before the health care law was enacted.
“The report goes on to show that Mr. Foster repeated his concerns during the Summer of 2009. He writes to another administration official, he says:
“I’m sorry to report that I remain very doubtful that this proposal is sustainable at the specified premium and benefit amounts…Thirty-six years of actuarial experience lead me to believe that this program would collapse in short order and require significant federal subsidies to continue.’
“The evidence is indisputable. Administration officials at the Department of Health and Human Services knew the CLASS program was unsustainable.
“They knew before President Obama signed the health care bill into law. They knew it, yet the Administration failed in their duty to be honest with the American people and tell them.”
###