CLASS Failure Illustrates ObamaCare's Dependence on the Mandate
10/20/11
By Hadley Heath
This week, news about ObamaCare has been dominated by the administration's announcement that the CLASS Act would not be implemented. CLASS, or "Community Living Assistance Services and Supports," was a long-term care insurance program buried in ObamaCare that, according to its CBO score, would show savings at first (as premiums were collected) and long-term losses. Those savings in the first ten years were significant - $86 billion or about 40 percent of ObamaCare's total "savings."
But the reason HHS cannot implement CLASS now is that it doesn't meet a standard built into the law to ensure its sustainability for 75 years. Analysis has shown that the program (unsurprisingly) cannot sustain itself. Remember, this is a program for long-term care insurance. People who want long-term care insurance are usually already sick and/or old, meaning there's some serious adverse selection going on here. And notably, CLASS is a voluntary program, and unlike "minimum essential coverage" is not mandated for everyone.
If anything, the failure of the CLASS Act shows us the strong relationship that ObamaCare's individual mandate has with the law's price controls and health insurance regulations. While liberals continue to favor regulations such as "guaranteed issue," the individual mandate (at the center of many of the health care lawsuits) is the least popular part of the law. But the two are married.
According to Kaiser, a majority of Americans disapprove of the individual mandate. But this of course begs the question: How can the rest of the law stand without the mandate?
Without a mandate, ObamaCare's insurance regulations would work much like CLASS. Health insurance premiums would skyrocket because insurers would still be required to sell policies to everyone - regardless of health status - and the incentive for young, healthy people to go without insurance would become greater. Ultimately, insurers could not bear to continuously cover only the sickest customers, and they would be driven into bankruptcy. (CLASS did not drive the federal government into bankruptcy; it was already there, and CLASS was dismissed before it ever really began, but the point remains, it would have bankrupted itself.)
The individual mandate is an affront to individual liberty. Time will tell if the Supreme Court rules it unconstitutional. But if SCOTUS does strike down the mandate, we can only hope the Court will also strike the insurance-related provisions along with the mandate - at least the provisions that depend on the individual mandate to fund the health insurance system. The CLASS Act is a real piece of evidence for the courts of how unworkable ObamaCare would be without the unconstitutional mandate. It is also evidence for the American people: ObamaCare is so bad, it will only work if we are all forced to buy into it by maintaining minimum essential coverage as dictated by the government.
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