Congressman launches effort to stop the CLASS Act
By Jesse Slome
American Association for Long-Term Care Insurance
A letter from Congressman Charles W. Boustany, Jr. (R-LA) seeks cosponsors for proposed legislation (H.R. 5853) that would reverse legislation creating a new federal long term care program (CLASS). CLASS will likely not be implemented until 2013, meaning that if the plan is going to be changed, now would be the time, before employers have to evaluate the pros and cons and dollars are withheld from employee paychecks.
The Congressman's letter released reads as follows:
"Most Americans remain unaware of the CLASS program, a new government-run long term care insurance program that was slipped into the health care law.
Speaker Pelosi and her allies behaved recklessly when they used the CLASS program as a $70 billion budget gimmick to fund other portions of the new health care law. Congress has a duty to stop the implementation of this new, unfunded entitlement before a single premium dollar is collected from hard-working Americans.
Instead of setting money from CLASS premiums aside solely for promised benefits, Democrats used it to pay for other parts of the new health law and merely put an IOU in a government trust fund. Americans could be required to repay these IOUs in the form of higher taxes.
Actuaries and budget experts widely agree CLASS is fatally flawed. Senate Budget Committee Chairman Kent Conrad publicly called the program `a Ponzi scheme of the first order, the kind of thing Bernie Madoff would be proud of.'
The Congressional Budget Office, the American Academy of Actuaries and CMS's own actuary warn the program will disproportionately attract enrollees with the highest costs. Premiums will skyrocket and discourage young and healthy workers from enrolling. The program will enter what Medicare Chief Actuary Rick Foster called `an insurance death spiral.'
The Chief Actuary predicted that CLASS will begin to run deficits in 2025 and continue to run deficits thereafter. He also estimated that an initial average premium of about $240 per month would be required to adequately fund CLASS program costs. CBO said CLASS `...would add to budget deficits in the third decade -- and in succeeding decades -- by amounts on the order of tens of billions of dollars for each 10-year period.'
I urge you to cosponsor the Fiscal Responsibility and Retirement Security Act (H.R. 5853). This bill would stop the Obama Administration from implementing a final CLASS plan without a vote of approval by two-thirds of the House and Senate."
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