CLASS Fails*

Reporting on Politics and Policy.
Oct. 14 2011 5:59 PM

CLASS Fails*

It sounded like a great idea. CLASS, a long-held dream of Ted Kennedy, would allow people to pay a premium that, if they needed it, could eventually fund their home care. It solved a problem that Medicare didn't. According to the early estimates of the Affordable Care Act, it would save $86 billion over ten years.

And then it became clear that it wouldn't save that much. Sarah Kliff explains why Kathleen Sebelius just killed CLASS.

The administration could not design a long-term care program that would both hew to the health reform law -- which requires that CLASS beneficiaries receive a minimum of $50 in benefits per day -- and make the program actuarially sound.
“We have been looking at twin objectives, achieving actuarial soundness over a 75-year period, as well as being legally solvent, supported by the law,” says Kathy Greenlee, assistant secretary on aging at HHS. “We found some tension between those two objectives. The things we could do to achieve actuarial soundness take us too far from the law.”
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Avik Roy called this a few weeks ago (!), immediately nailing down the details and the line from Republicans, who really have a point about how unsustainable the program was. One: It was shoehorned into the health care bill in part because Ted Kennedy had always wanted it. That's very nice, but not a fantastic reason to pass something. Two: This is the argument against the PPACA. These various patches onto the current health care system look, in some places, like hideous kludges, meant to disappear as we melt into a more European-style full coverage system. But the period before that has turned out to be economically bleak; implementation is harder than Democrats predicted.

*This was the default winner of an uncompetitive contest for obvious punny headlines.

David Weigel is a reporter for Bloomberg Politics

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