Thune Amendment (#3640) to Strike the CLASS Act
Senator Thune has offered a motion (#3640) to strike the CLASS Act.
Considerations
- While Republicans support a long-term care insurance solution that is fiscally responsible, sustainable and responsive to the needs of disabled individuals. However, the CLASS Act, which over-promises and under-delivers, is not a sustainable solution for our nation.
- During debate of the health care reform bill considered by the Senate in December, this same amendment received 51 votes, with 12 Democrats supporting it.
- While the health law itself includes Sense of the Senate language that CLASS Act revenue “should be reserved…and not spent for other purposes,” the final CBO score found that the measure raids $4.2 billion in revenue from the CLASS Act and Social Security in order to pay for new health care entitlements. This change to the score makes an already unsustainable CLASS Act program even more fiscally unsound.
- In its final score of the health care law, CBO stated the CLASS Act would save $70.2 billion over the 10 year budget window—but CBO has also previously pointed out that it will increase the deficit in later years.
- CBO said the following in a letter released on November 25:
“In the decade following 2029, the CLASS program would begin to increase budget deficits.”
“The CLASS program would add to the budget deficits in future decades even though the proposals require the Secretary of HHS to set premiums to ensure the program’s solvency for 75 years.”
“The CLASS Act “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.”
- The Washington Post has called the CLASS Act a “gimmick…designed to pretend that health care is fully paid for.”
- Kent Conrad (D-N.D.) called the CLASS Act “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”
- CBO projects that only 10 million individuals (3.5% of the eligible population) will participate in the program. This means it will not be a broad based program in the benefits it offers—but it will require all taxpayers to bail the program out when it starts paying out more than it takes in.
- The Administration’s chief health actuary has stated that the CLASS Act faces “a significant risk of failure” and “there is a significant risk that the problem of adverse selection would make the CLASS program unsustainable.”
- The CBO says that the argument that the CLASS Act funds would be saved for future use is false. CBO’s November 25 letter to Senator Harkin on the CLASS Act points out that actuarial soundness is NOT synonymous to the program being cost-free in budget terms.
- The CBO said, “[T]rust fund income from investments in federal securities would be an intragovernmental transfer within the federal budget. As a result, from a budget scorekeeping perspective, the CLASS program would inevitably add to future deficits (on a cash basis) by more than it reduces deficits in the near term, even though the premiums would be set to ensure solvency of the program.” Those additional deficit increases would amount to “the order of tens of billions of dollars for each 10-year period” after 2029.” [Harkin Letter].
- The American people cannot afford for this Congress to create another entitlement program that will add to our ballooning federal debt.