Small silver lining in fiscal cliff deal? Part of Obamacare was repealed


Since the fiscal cliff passed Congress and was signed by President Obama, Tea Party Patriots has pointed out the many flaws in the law. Between the lack of spending cuts, tax increases, and special interest tax benefits, as well as inclusion of unemployment benefits and the farm bill, the deal has been roundly criticized.

However, there is one bit of good news in the law: it repeals the Community Living Assistance Services and Supports (CLASS) Act, one of the most egregious aspects of the Affordable Care Act. As explained at The Heritage Foundation’s blog:

But the program was so poorly designed—much like the rest of Obamacare—that even the Obama Administration had to admit it wouldn’t work. A letter to Congress in 2011 from a CLASS administrator warned of extreme adverse selection in the program, stating that “if healthy purchasers are not attracted to the CLASS benefit package, then premiums will increase, which will make it even more unattractive to purchasers who could also obtain policies in the private market. This imbalance in the beneficiary pool would cause the program to quickly collapse.”

The CLASS Act was a major weapon in the Administration’s claim that the Affordable Care Act has a deficit reduction impact. The Act would have collected money for five years without spending a dime on patients, thus making it a deficit reducer in the first decade. After that, however, it would have added tens of billions to the national debt every decade.

How did repeal of this program happen? It started when the program was first included in Obamacare, since it was mostly included to honor the late Senator Ted Kennedy (D-MA), who was a strong supporter of its creation. Republicans hammered it, and Democrats often didn’t support it. It unofficially happened in 2011, when an amendment included in Obamacare by former Senator Judd Gregg (R-NH) all but killed it. Via Sarah Kliff at The Washington Post Wonk Blog on October 2011:

If anyone can claim responsibility for the CLASS Act’s demise, it’s probably Sen. Judd Gregg. During the health reform debate, the former Republican senator from New Hampshire secured an amendment requiring the Department of Health and Human Services to certify that the long-term insurance program would be fiscally sound.

On Friday, HHS announced it couldn’t meet that requirement: no matter how the program was modeled, actuaries could not find a way to get the premiums paid in to cover the benefits paid out. The CLASS Act would have to come to halt.

“I expected that, at sometime it would implode because of the amendment,” Gregg told me in an interview earlier today. “I am surprised at how quickly they came to that conclusion.”

However, little is permanent in Washington without legislation, so the CLASS Act was always a threat while it lay collecting dust. It is to Congress’ credit that it has officially repealed the Act, even if it is only a tiny bit of good news in an avalanche of bad news.