For those of you who have not had the opportunity to pick up a copy of the 2,074-page ObamaCare law (H.R. 3590) for some light reading, the National Center for Policy Analysis (NCPA) has published a short, two-page analysis on the new long-term care entitlement program discussed in the law (see “The New Long-Term Care Entitlement“).
Known as the Community Living Assistance Services and Supports (CLASS) Act, this government-run program looks like long-term care insurance at first: participants pay monthly premiums, which the government invests and then uses to pay long-term care benefits for participants down the road. But truth be told, it violates the principles of sound insurance: no investment of premiums and no underwriting for health conditions, leaving future taxpayers footing the bill.
If one were to peruse the CLASS legislation, it would appear that taxpayers are off the hook. Consider the following passages from H.R. 3590:
“No taxpayer funds shall be used for payment of benefits under a CLASS Independent Benefit Plan (H.R. 3590 pg.1972),”
“One-hundred percent of the premiums collected…” for the CLASS program will be deposited into the CLASS Independence Fund (H.R. 3590 pg. 1946).
Though technically true, these claims are deceptive. They give the impression that CLASS premium dollars will be invested, as would be typically done by a private insurer and that tax dollars will never pay fo
r CLASS benefits.
ObamaCare doesn’t explicitly outline how CLASS dollars will be invested. Rather, it points to regulations outlined by the Social Security Act, which appeal to the United States Code for further clarification. Apparently, the authors of ObamaCare prominently positioned the details they wanted to draw attention to while constructing a scavenger hunt to the facts they believed would be less popular. Upon completing this scavenger hunt, the more serious reader will find that:
CLASS premium dollars may only be invested in “interest-bearing obligations of the United States,” “in obligations guaranteed as to both principal and interest by the United States,” or in U.S. “public-debt obligations” (H.R. 3590 pg. 1965) and [subsection (c) of Section 1841 of the Social Security Act (42 U.S.C. 1395t)].
Consequently, CLASS Act premium dollars will be allowed to flow into the U.S. Treasury’s general revenue fund, permitting CLASS dollars to pay for things like Social Security benefits, the health care overhaul and any other program
congress wishes to implement.
Additionally, the government (i.e. taxpayers) will guarantee all CLASS Act investments, ensuring that taxpayer dollars will be used to buy back the investment obligations held by the CLASS Independence Fund. When CLASS expenditures exceed revenues, as the Congressional Budget Office predicts will happen in about 20 years, benefit promises will be guaranteed by tax dollars.
Bottom line: It may look like a duck and quack like a duck, but in reality, CLASS is a goose.