Re-elect Dan Lipinski Congressman

Lipinski Helps Introduce Bill to Eliminate Financially Unsound Provision from Health Care Law

Last week, Rep. Dan Lipinski (IL-03) joined with Reps. Charles Boustany Jr. (La.) and Phil Gingrey (Ga.) to introduce the Fiscal Responsibility and Retirement Security Act, H.R. 1173, to eliminate a portion of the health care law, the CLASS Act, that experts agree is financially unsound and would add significantly to the national debt over the long term.

“Having warned from the beginning that the CLASS Act was unsustainable and would add to America’s already swollen national debt, I believe we must take action now to protect taxpayers,” Rep. Lipinski said. “The CLASS Act is well-intentioned, but even Secretary of Health and Human Services Kathleen Sebelius has conceded that the current version of the program is ‘totally unsustainable.’ Since a viable reform of the program has yet to be proposed to ensure its solvency, we need to repeal it before it starts taking in premiums. The federal government should not make promises it cannot keep.”

The Community Living Assistance Services and Supports (CLASS) Act creates a fatally flawed long-term care insurance program. The nonpartisan Congressional Budget Office has estimated that while the CLASS Act would create a $70 billion surplus during the first ten years of the health care law, it would actually add at least tens of billions of dollars to the federal deficit every decade after 20 years. The Chief Actuary of the Centers for Medicare and Medicaid Services found the program faces “a very serious risk” of entering an “insurance death spiral.” President Obama’s National Commission on Fiscal Responsibility and Reform – the “Bowles-Simpson Debt Commission” – recently agreed, observing that the act is “viewed by many experts as financially unsound” and threatens to “collapse under its own weight.”

The design of the CLASS Act leads to the problem of adverse selection, in which the young and healthy decline to enroll, resulting in a pool of beneficiaries whose premiums cannot cover the cost of their benefits. Increasing premiums only compounds the problem by further encouraging healthier individuals to conclude participation is not in their interest. While supporters of the program have suggested making a variety of changes to prop it up, the end result would very likely be no different. Alicia H. Munnell, Director of the Center for Retirement Research at Boston College and a former economic adviser to President Bill Clinton, recently reported that the CLASS Act “faces enormous challenges” and that even with changes “premiums may never reach an affordable level for middle-class households.”

Furthermore, one of the main options for addressing the problems with the CLASS Act – a change to the minimum earnings requirement by the Secretary of Health and Human Services – appears unlikely to survive a court challenge, according to an analysis by the Congressional Research Service.

“The stated goal of the CLASS Act was to pay for coverage through the premiums charged by the program, and there continues to be universal agreement that its ability to self-finance is the criterion by which it must be evaluated,” Congressman Lipinski said. “Unfortunately, a close examination of the program shows that it is not viable over the long term. The only reasonable option in the context of today’s budget difficulties is to end the program now. Failure to do so will simply shift the burden of paying for the CLASS Act to future generations. We cannot afford to add any more to our already crushing federal debt.”

(March 23, 2011)

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