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Republicans Grill HHS on CLASS Failure to Launch

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The House Subcommittee on Oversight and Investigations and the Subcommittee on Health, arms of the House Energy and Commerce Committee, held a joint hearing Wednesday, to pounce on the early warnings dooming the Community Living Assistance Services and Support Act Act (CLASS), two years before it was finally declared dead on arrival.

Earlier this month, CLASS was pronounced not viable by the U.S. Health and Human Services Secretary Kathleen Sebelius in a report to Congress.

The CLASS program — one of many programs created by the Patient Protection and Affordable Care Act of 2010 (PPACA) — is a long-term health care program that was included in the president’s health care law. It was meant to be self-funding —individuals paying premiums into the program would cover the costs of individuals receiving benefits.

Going into an election year where the health care reform act is taking center stage in Washington, at least, Committee Republicans contend that the CLASS program always had a design flaw. Oversight Subcommittee Chair Cliff Stearns, R-Fla., used the opportunity to lambast Democrats for sneaking in a program that wouldn’t work, even though they claimed it would “provide $70 billion in deficit savings.” 

“Why did it take the administration so long to figure out what everyone else, even the CMS chief actuary, has known for years? HHS and the administration seem to have gone to extraordinary lengths to ignore the truth so that they could continue to sell the false savings story to the American people,” Stearns alleged. 

House Health Subcommittee Chair Joe Pitts, R-PA, took HHS to task for rallegedly wasting 19 months of time and $15 million of taxpayer money to arrive at  a conclusion he said prominent actuaries had already arrived at more than two years earlier, predicting CLASS’s collapse. 

Republican leaders embraced an old quote by Kent Conrad, the Democratic chairman of the Senate Budget Committee, who called the CLASS Act “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”

They pointed out hat the writing was on the wall before the act even went into effect and Pitts called CLASS Act provided a convenient budgetary gimmick meant to show savings.

The Congressional Budget Office had estimated including the CLASS Act would reduce the 10-year cost of the legislation by $70 billion. 

“The CLASS Act was doomed from the start. It should not have been included in PPACA, and it should not have taken eight months after the secretary publicly discredited the program for the department to pull the plug” Pitts stated. He called for it to be repealed rather to be allowed to linger.

Kathy Greenlee, assistant secretary for Aging for HHS, who was last to testify, told Congress “it is crucial to recognize that [dropping CLASS] does not affect the rest of the Affordable Care Act. …And even without the CLASS program’s up-front revenue, the Affordable Care Act will reduce the deficit.”

HHS conducted analysis of the CLASS statute and a wide array of possible implementation options for a long-term care insurance program over the past 19 months, under the Office of the Assistant Secretary for Planning and Evaluation, and the Office of the General Counsel.

Greenlee stressed in testimony the actuarial scrutiny with which the CLASS Act  had been subject. Actuaries were consulted “at every step of the way” including the in-house actuary and two outside actuarial firms, insurers, and consumer groups, Greenlee testified. 

However, by September, all that gave way, and the actuary had left the building.

Finally, on Oct. 14, a Friday, Sebelius submitted to Congress a report describing the results of actuarial and policy analyses of the CLASS Act and the legal analysis of various benefit plan options. Greenlee pointed to the need for workable solutions for long-term care problems given that, by 2020, an estimated 15 million Americans will need long-term care.

“One of the main reasons we decided not to move forward with CLASS at this time is that we know no one would be hurt more if CLASS started and failed than the people who had paid into it and were counting on it the most. As prudent stewards of taxpayer dollars and the people we serve, we simply cannot let that happen,” Greenlee stated. 


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