No CLASS

GOP to try to repeal CLASS Act. [Link]

CLASS, which stood for Community Living Assistance Services and Supports, was a pet project of the late Democratic Sen. Edward Kennedy.  It was supposed to help Americans pay the cost of long-term care.  During the health care debate in 2009 and 2010, Democrats claimed that the program would not only pay for itself but would actually reduce the federal budget deficit.  At the time Obamacare passed, Democrats claimed the law overall would cut the deficit by $140 billion over the next ten years; about $70 billion of that was supposed to come from the CLASS Act.

But even then, lawmakers of both parties knew that CLASS was unworkable.  Democrats structured the program to collect premiums for years before beginning to pay out benefits -- thus, it appeared to reduce the deficit when it would in fact greatly increase the deficit once it began making payments.  As a voluntary program, it would become acutely unworkable if, as expected, only those in need of long term care signed up for it.  Everyone knew that; during the Obamacare debate, Democratic Sen. Kent Conrad called CLASS "a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of."  Yet Conrad and all his fellow Democrats voted for Obamacare, including CLASS.

Finally, on Friday, Health and Human Services Secretary Kathleen Sebelius admitted it won't work.  "Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time," Sebelius wrote in a letter to Congress.

So what now?  The Obama administration, which had set up CLASS offices inside the Department of Health and Human Services and devoted great resources to its implementation, would apparently like to just shut it down and pretend CLASS never existed.  But it is in the Obamacare law.  And in light of the administration's admission Friday, Republicans will soon move to repeal CLASS altogether.  "Though it won't be implemented, it would be good to get it off the books," says one well-connected Senate source.  In a statement released late Friday, Senate Minority Leader Mitch McConnell said, "The Obama administration today acknowledged what they refused to admit when they passed their partisan health bill: the CLASS Act was a budget gimmick that might enhance the numbers on a Washington bureaucrat's spreadsheet but was destined to fail in the real world."

There is already a bill to repeal the CLASS Act, sponsored by Lousiana Republican Rep. Charles Boustany, pending in the House.

Given the Obama administration's new position, it would be hard for Democrats to vote against repealing CLASS.  But other than one tax-related section (the so-called 1099 provision), Democrats have been loathe to touch Obamacare, lest they open the door to continued Republicans efforts to dismantle the health care law.  So repeal could be an embarrassing vote.  In addition, repealing CLASS would cut in half the amount of money by which Obamacare is supposed to cut the deficit -- even though deficit-cutting projections have been mostly discredited in the year and a half since Obamacare was passed.  The bottom line is that repealing CLASS would force Democrats to admit that a significant part of their signature legislative achievement was fatally flawed.  That's why Republicans will push hard for it.