CLASS Act on the ropes?

The federal Department of Health and Human Services shut down the office in charge of implementing the CLASS Act on September 23, putting in doubt the future of one of the Obama health care bill’s signature programs for dealing with long-term disabilities.

Photo of scissors cutting paper money
CLASS Act victim of debt crisis?

“My understanding is they’re slowing down the development,” departing CLASS (Community Living Assistance Services and Supports) Act office actuary Bob Yee told the Wall Street Journal. “They’re taking a pause and reducing the amount of work being done.”

The announcement came two days after the Senate Appropriations Committee passed its fiscal year 2012 budget, with no funding for the program. The Obama Administration had requested $120 million for its implementation.

The Department of Health and Human Services, in a statement, denied that the closing of the office meant the program was terminated, according to a column by the Washington Post’s Ezra Klein from September 22.

“While the staff of the CLASS office has been reduced, reports that the CLASS office is closing are not accurate,” according to the statement. “We are continuing our analysis of this program. As we have said in the past, it is an open question whether the program will be implemented. A CLASS program will only be implemented if it is fiscally solvent, self-sustaining, and consistent with the statute.”

The program, which was pushed heavily by the late Senator Edward Kennedy, would allow  individuals, through their employer, to pay into a disability insurance program to provide cash benefits for assistance with daily activities, such as dressing, bathing and eating.  To receive benefits, individuals would have to pay into the program for a minimum of five years.

The program, which would be available to people earning less than $1,000 per year for at least three years during the five-year enrollment, is required by law to be completely sustainable and not require any taxpayer money to pay for benefits.

According to the Congressional Budget Office, the program would save the federal government more than $70 billion during the next decade, or more than half the projected savings during that period by the entire Affordable Care Act. However, critics argue that because the program requires a five-year enrollment period, the program will quickly begin paying out more in benefits than it brings in, leading to an inevitable taxpayer bailout. They also argue that the program’s high premiums will deter individuals from voluntarily paying into the system.

The Gang of Six, a bipartisan deficit reduction commission, recommended eliminating the program in its recommendations released in July.

The Department of Health and Human Services’ deadline for implementation of the program is October 1, 2012.

2 responses to “CLASS Act on the ropes?

  1. Washington State L&I has been abusing insured workers for years. The way our state justifies it is to look the other way. The disabled and senior communities are left in the dark. Seattle built a $41 million dollar City Hall but the ADA/handicap parking was an afterthought. When we requested officials get in a wheelchair and attempt to push themselves uphill they declined. When we’re handicapped we don’t have a choice if we require functioning. Don’t let our government keep us bound, unite stand up and fight back.

  2. It’s good to hear that at least some … can count. The CLASS Act never made any sense, even if you were willing to swallow the front-loading of premiums gimmick (collecting premiums for five years while deferring benefits to make the thing look solvent). NDRN’s support for this ill-conceived program was disappointing, but not surprising, given the mental health risks people face when they live inside the Beltway for too long. What now? Maybe start with shrinking government and letting insurance companies do business across state lines, free of special interest mandates. The profit incentive, together with real competition, would generate 14.5 trillion better ideas than 14.5 trillion Congressional committees meeting continuously for the next 14.5 trillion years.

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