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Gregg's revenge: Killing the CLASS Act

October 19. 2011 7:57PM

When former Sen. Judd Gregg smelled something wrong with federal budget numbers, something was probably very wrong indeed. So it is no surprise to us that an important part of Obamacare died last week because of a hunch Gregg had about its financial sustainability.

Among Obamacare's multitude of offerings was something called the CLASS Act, a program created by Ted Kennedy to provide long-term care benefits to Americans. Kennedy wanted the federal government to give people long-term care benefits (such as paying for nursing home care) in exchange for small premium payments. The program was not to be subsidized, but was to be funded entirely by premium payments.

Of course, private insurers already offer such services. But to make sure they don't go bankrupt, insurers use underwriting, meaning that rates rise with age, and already sick people either pay higher rates or are denied coverage. Kennedy didn't like that. So the law would let anyone, regardless of age or health status, sign up for CLASS.

Gregg figured that would be unsustainable. So he got an amendment inserted into the bill that required CLASS to be certified as actuarily sound (meaning it fully paid for itself) for 75 years before it could start. But that was impossible, and the program was killed.

That's a big deal because the Congressional Budget Office scored CLASS as reducing the federal deficit by $86 billion over 10 years. The CBO is not allowed to score a program beyond a decade. Gregg's amendment required a 75-year projection. That confirmed what the CBO could not: CLASS was a financial fraud.

If House Republicans want a good issue with which to fight Obamacare going into this next election, they should push to have the whole Affordable Care Act scored as CLASS was. It won't pass, but Democrats will have to explain why they oppose it, which will be useful as well as entertaining.

Health Politics Editorial