CLASS Act?

CLASS dismissed.

With extreme prejudice.

The Obama administration has deemed the CLASS Act, a portion of the landmark health care law, a budget-buster. It terminated the program last Friday, less than a month after most of its staff had been dismissed or reassigned and denials flew about the CLASS Act’s demise.

To hear the White House talk about it, the CLASS Act, designed to provide lifetime benefits to the disabled and those needing long-term care, was a mere legislative bauble.

“This isn’t even a hood ornament,” a senior administration official with deep experience in the health care debate told me. “It’s like the windshield wiper on the back window of a car—but maybe not even that. The CLASS Act is not central in any way to the health care reform act.”

“That’s tough,” said Connie Garner, a longtime aide to the late Sen. Ted Kennedy, who fought for years to pass the CLASS Act. Garner said the White House cared about the CLASS Act. “It was very important to them when it was being debated,” she told me. “I don’t know why it isn’t important to them now.”

In fact, when the health care law was before Congress, the CLASS Act accounted for $70 billion of a projected $132 billion in 10-year savings credited to the bill by the Congressional Budget Office. The provision provided deficit reduction because the government was to begin collecting voluntary premiums in 2012 but not begin providing benefits until 2017.

For a year now, the Department of Health and Human Services has been trying to figure out a way to keep CLASS Act benefits—a lifetime stream of aid averaging $75 a day for the disabled and the elderly with functional limitations related to activities such as eating, bathing, and dressing. Under the law, a beneficiary had to pay premiums for at least five years before receiving benefits. A Senate amendment required the law prove actuarial soundness for 75 years. Premiums had to be set with that numerical soundness in mind.

And that was a budgetary bridge HHS could never cross. “They couldn’t figure out a way to make it work,” the senior administration official told me. Interestingly, the White House opposes Republican efforts to repeal the CLASS Act, arguing it’s important to keep an admittedly unworkable structure until it can negotiate something better with Congress. “We’re looking for a better way to address long-term care issues. We’d like to spend our time on that instead of repeal.”

Sen. John Thune, R-S.D., is more than willing to push for repeal of the CLASS Act and take the issue anywhere. “This was done the wrong way,” he told me. “It was built on a faulty foundation. I would like to give the administration credit, but the law put them into a straight jacket.”

Former Sen. Judd Gregg, R-N.H., stitched that straight jacket. He required the 75 years of actuarial soundness. He didn’t kill the CLASS Act, but he limited the administration’s options.

“I knew we weren’t going to stop it,” Gregg said. “It was Ted Kennedy’s bill. Out of respect for him we knew we wouldn’t kill the CLASS Act. But I wanted this amendment because many of us [Republicans] were concerned about a new entitlement that on its face didn’t make sense.”

Upwards of 275 organizations backed creation of the CLASS Act, and many believe it can survive what appears to be a bureaucratic death blow.

“There is a path for moving forward,” said Larry Minnix, president and CEO of Leading Age, a coalition of 5,600 nonprofit groups focused on elderly care issues. As for the White House declaration that it opposes repeal of the CLASS Act, Minnix cheered: “We view it as a very good sign.”

Bob Yee, a former HHS actuary for the CLASS Act, believes the program can be saved and that Secretary Kathleen Sebelius has wide administrative authority to balance premiums, benefits, and eligibility.

The White House disagrees. “I don’t see any reason to believe that [interpretation of Sebelius’s flexibility] is legal,” the senior administration official said.

Minnix said he’s eager to learn when and whom the administration will appoint to a CLASS Act advisory panel. Garner, the former Kennedy staffer, wonders, too. The White House could not say when or even if it would fill the panel.

To critics like Thune and Gregg, the CLASS Act’s agonizing death is symptomatic of larger structural flaws in the law. “The whole bill is nothing but a house of straw,” Gregg said. “The pay-fors in the CLASS Act were not what they were cracked up to be. The health care law is a house of cards.”

House?

Not to the White House. The CLASS Act isn’t even a rear-window wiper.

While it is doubtlessly true that Kennedy would be proud to see universal health care enacted, it would undoubtedly grieve him to see what’s become of his last great legislative achievement. Garner, for one, wonders if Obama is so dismissive.

“I’m befuddled where they are,” Garner said. “I’d like to know where the leader of the country is on this.”

Mr. President?

This article appears in the Oct. 19, 2011, edition of National Journal Daily.

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