The White House Ain't Got No Class (And That's a Good Thing)

In a surprise move the White House dropped today one of the more budget busting provisions of the Obamacare legislation, called the CLASS Act (Community Living Assistance Services and Supports), it was designed to provide people with long term in-home care. The CLASS Act wasn't part of the Obamacare debate, and few people outside of those who read the legislation knew about it but experts agreed that it could've exploded the federal budget deficit down the road and personal budgets before that.

The Community Living Services and Support (CLASS) Act was designed to assist people who need in-home assistance with basic daily tasks There are a few problems with the plan. First of all Congress wrote the legislation so people were automatically enrolled in the plan, employers were to automatically take the money out of your check unless one opted-out. The plan, was constructed in a way that it couldn't pay for itself over the long run and it would have have been one of the biggest budget busting parts of Obamacare.

 According to  Kathleen Sebelius the Care Act was dropped because they even the free-spending Obama Administration couldn't find a way to make it financially viable.

In a letter to Congress, Sebelius wrote, "Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time."

But a senior administration official told CNN that there were big questions whether CLASS could be self-sustaining even when the health care reform law was being considered by Congress. And as a result, lawmakers specified that the HHS secretary had to determine that the program would be sustainable for 75 years before certifying it.

In a blog entry on Healthcare.gov, Sebelius cited warnings that not enough young healthy people would sign up.

"This could have led to a vicious cycle where premiums would have to be set higher and higher to cover the likely costs of benefits, leading fewer and fewer healthier people to sign up for the program," she wrote.

Sebelius said she wasn't giving up.

"So even as we suspend work on implementing CLASS, we are recommitting ourselves to the ultimate goal of making sure Americans can get the long-term care they need, whether it's a working-age mom with disabilities who needs daily support right now or a young man at his first job who wants to protect himself and his family against the possibility of huge long-term care costs in the future," Sebelius wrote.

House Budget Committee Chairman Ryan issued this statement about the end of the Class Act.

“To hide the true cost of their health-care overhaul, the leaders of the Democratic party loaded it with gimmicks and double-counting. One of the most egregious of these gimmicks involved the CLASS Act, a new long-term care program that was scored as an offset against the ten-year, trillion-dollar cost of the Democrats new law. Independent health care experts warned that the CLASS Act program would turn into a classic ‘insurance death spiral.’ Not only would the short-term savings fail to materialize, but the long-term costs would prove catastrophically high. Even Democratic Senator Kent Conrad called the program ‘A Ponzi scheme Bernie Madoff would have been proud of.’

“Today, the Obama Administration finally surrendered to reality: Health and Human Services Secretary Kathleen Sebelius has informed Congressional leaders that she ‘does not see a viable path forward for CLASS implementation at this time.' The smoke and mirrors that the Democrats employed to sell their health care overhaul are finally falling away, one broken promise at a time. When all of these gimmicks are stripped out, the new law would add hundreds of billions of dollars in red ink over the next decade, as health-care costs send the debt spiraling out of control. Now it is time for Congress to do the responsible thing: Repeal the disastrous new law and replace it with true, patient-centered reforms.

The Dropping of the Class Act just a small victory in the "war" against Obamacare. As Rep Ryan said above, now it is time to get rid of the entire disastrous health care law, our grandchildren are depending on us. 

Shocking Survey: 30% Of Employees Will Lose Healthcare Benefits Because of Obamacare

The President said it over and over,

"No matter how we reform health care, we will keep this promise to the American people," Obama said addressing the American Medical Association. "If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you'll be able to keep your health care plan, period. No one will take it away, no matter what." He didn't let up."If you like what you're getting, keep it," Obama said. "Nobody is forcing you to shift." Source

The President is correct,  the government would not force a change, but of course just like they can do today, your employer can and will  force a change.


The way the Obamacare bill is structured, it is cheaper for a company to pay a fine and drop heath coverage for employees than to provide them with heath care.  A new study by McKinsey Quarterly released today confirms that at least 30% of employees will have to switch providers because of their company's dropping of health coverage.

The Congressional Budget Office has estimated that only about 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to subsidized-exchange policies in 2014. However, our early-2011 survey of more than 1,300 employers across industries, geographies, and employer sizes, as well as other proprietary research, found that reform will provoke a much greater response.

Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after 2014.

Why the big difference, well the CBO based their estimates on what happened in Massachusetts, where the bill is similar but many provisions including the employer penalties are much different. McKinsey made their estimates using different methodology.  They actually asked employers.

The study also reported that the more employers know about the Obamacare bill the more likely they would be to drop employee coverage:

Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.

At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries.

Contrary to what many employers assume, more than 85 percent of employees would remain at their jobs even if their employer stopped offering ESI, although about 60 percent would expect increased compensation.

Many people would prefer to get more cash than heath insurance. Especially lower income employees who would not only receive higher pay but government subsidies to help them pay for the coverage at the state exchanges.

“The subsidies will keep the cost of insurance coverage from the exchanges below what many employees now pay toward employer-sponsored coverage, especially for those whose earnings are less than 200 percent of the federal poverty level,” McKinsey concludes.

In other words, both the employer and the employee might recognize that the most economically beneficial arrangement between the two could result from the lower costs an employee would pay for health care outside the workplace, because premiums and out-of-pocket costs would be subsidized by the government. At the same time, the employer could raise the employee’s salary or increase wages by a smaller amount than the penalty it would pay for not insuring the employee—provided that the wage increase plus the penalty does not equal the cost the employer would already bear.

The conspiracy theorists among us will say this was done intentionally to make things easier for the progressives next step, a single payer health care system.  Others will say, that this is an unexpected consequence of a law designed by progressives who do not understand capitalism.  The will add, of course companies will chose to drop coverage it it will be cheaper.

In a way the reason doesn't really matter, but the result does. As predicted,  Obamacare is going to hurt, rather than help the health care of America.

The entire McKinsey study can be read here

Chris Christie: Obamacare is Killing the States

Widely reported in the blog world is the fact that the latest projections show that Obamacare will increase the federal deficit, not decrease it as progressives contend. What is not widely reported is that the mandates that accompany the government run-health care plan saddle the states with an oppressive financial burden.

CNS News spoke to conservatives favorite Governor Chris Christie who says that the problem is not only the financial burden but the fact that there is no flexibility in the way states are allowed to provide benefits:

“Listen, I think that there’s got to be a credible plan that’s put forward that deals with entitlements in a serious way," said Christie on the red carpet of MSNBC's White House Correspondents Dinner after-party. "And, you know, I think Congressman [Paul] Ryan’s got a good set of ideas there. Whether it’s the only way to go, we’ll wait and see.

"But I think as a governor what I’m most concerned about is getting us some more flexibility in Medicaid," said Christie. "It’s really kind of drowning the states. And so if his budget gives us more flexibility in Medicaid, I think that would be good. But you know I’m more concerned about what I have to do in New Jersey than I’m concerned about what they’re going to do nationally.”

Christie said the Medicaid mandates under the health care law are the largest concern for New Jersey.

“It’s Medicaid. It’s the biggest thing. I mean, our Medicaid program is $1.4 billion in deficit this year and because of Obamacare we can’t change the level of benefit that we offer because of the mandates that they’ve put on us. And, I think, you know, if we’re going to pay for 50 percent of it, we should have some control over it and the way this administration’s done it is they just want to control all of it. So, that’s the biggest problem for us,” he said.

Beginning in 2014, the health care law requires states to cover every individual under Medicaid whose income is equivalent to 133 percent of the poverty level or less.

 Typical progressive strategy, not only did they kick the "cost can" down the road with their funky accounting such as double counting the medicare cuts, but they also kicked it toward the states, who are stuck with half the cost, but no say in how it's spent.