The Democrats’ Solyndra of Healthcare

Much Like the Solyndra Loan Deal, Obama Administration Pushed Ahead With Expensive Program Despite Warnings, Only to Watch it Fall Apart

After repeated warnings before it was signed into law and months of denying that a key component of the Democrats’ government healthcare takeover was facing financial collapse, Obama’s Department of Health and Human Services (HHS) finally caved late last week and admitted that the Community Living Assistance Services and Support (CLASS) Act was “too flawed to salvage.”

However, in an act of political desperation to keep his left-wing base happy, President Obama criticized his own administration’s decision to dump CLASS “leaving advocates scratching their heads.”

Democrats counted on CLASS to provide almost half of the phony budget “savings” created by the government takeover of healthcare. Only in Washington could a spending program be counted on for “savings.”

BACKGROUND

After repeated warnings before it was signed into law and months of denying that a key component of the Democrats’ government healthcare takeover was facing financial collapse, Obama’s Department of Health and Human Services (HHS) finally caved late last week and admitted that the Community Living Assistance Services and Support (CLASS) Act was “too flawed to salvage”:

HHS SECRETARY KATHLEEN SEBELIUS: “I DO NOT SEE A VIABLE PATH FORWARD FOR CLASS IMPLEMENTATION”: “[Sebelius] said HHS did everything it could to find a plan that would work, and now has a better understanding of long-term care, but that ‘despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.'” (Sam Baker, “Obama’s HHS Ends Controversial Program in Healthcare Law,” The Hill, 10/14/2011)

“A MAJOR SETBACK” TO THE HEALTHCARE LAW: “[HHS] is calling for a halt to the implementation of the CLASS Act — a stunning end to the financially troubled long-term care insurance program and a major setback to the health care reform law.” (Brett Norman, “Setback for Long-Term Insurance Plan,” Politico, 10/14/2011)

“TOO FLAWED TO SALVAGE”: “But HHS officials acknowledged that CLASS fell apart simply because it was too flawed to salvage.” (Sam Baker, “Obama’s HHS Ends Controversial Program in Healthcare Law,” The Hill, 10/14/2011)

HOW DID WE GET HERE? DEMOCRATS WERE WARNED REPEATEDLY THAT CLASS WAS “A RECIPE FOR DISASTER”:

OBAMA ADMINISTRATION SAID AS EARLY AS LAST MONTH THAT REPORTS OF CLASS BEING SUSPENDED WERE JUST A “RUMOR”: “The administration called Yee’s allegations a ‘rumor’ but did not respond to repeated requests to explain on the record what’s happening with the program, and how it’s supposed to go forward without any funding.” (Julian Pecquet, “Internal Email Says Controversial CLASS Health Office to Close,” The Hill, 9/22/2011)

“TROVE OF INTERNAL E-MAILS” SHOW OBAMA OFFICIALS “KNEW THAT A PROGRAM FOR LONG-TERM CARE” WAS A “FISCAL DISASTER” BUT WENT AHEAD ANYWAY: “The Solyndra solar subsidy flare-up is getting all the media attention, but arguably as great a White House scandal concerns one of ObamaCare’s multiple new entitlements. A trove of internal emails uncovered by congressional investigators shows that administration officials knew that a new program for long-term care really was the fiscal disaster that critics claimed at the time.

“Known by the acronym Class, the government-backstopped insurance for nursing homes, home health aides and the like was among the worst accounting gimmicks used to make it seem as if national health care would reduce the deficit.” (Joseph Rago, “GOP Vets an ObamaCare Program,” The Wall Street Journal, 9/19/2011)

DEPUTY HHS SECRETARY TOLD TOP DEMS THAT PROGRAM LOOKED “LIKE A RECIPE FOR DISASTER”: “A Health and Human Services deputy secretary repeatedly warned his superiors and Democratic staff on the Hill that the Class program ‘seems like a recipe for disaster to me.’ Later, he even suggested that Democrats include a ‘failsafe’ for public support.” (Joseph Rago, “GOP Vets an ObamaCare Program,” The Wall Street Journal, 9/19/2011)

MEDICARE SCOREKEEPER RICK FOSTER PREDICTED THE “PROGRAM WOULD COLLAPSE IN SHORT ORDER AND REQUIRE SIGNIFICANT FEDERAL SUBSIDIES TO CONTINUE”: ” ‘Thirty-six years of actuarial experience,’ Mr. Foster wrote to the Medicare legislative affairs office, ‘lead me to believe that this program would collapse in short order and require significant federal subsidies to continue.’ He later wrote that ‘I assume you’ve conveyed these concerns to the staff but, if not, let me know and we can express these concerns in a memo.'” (Joseph Rago, “GOP Vets an ObamaCare Program,” The Wall Street Journal, 9/19/2011)

BUT DEMOCRATS “WENT AHEAD ANYWAY”: “The emails, obtained by a joint Republican panel led by Sen. John Thune and House Energy and Commerce Chairman Fred Upton, reveal that the administration knew the program was designed to fail and went ahead anyway.” (Joseph Rago, “GOP Vets an ObamaCare Program,” The Wall Street Journal, 9/19/2011)

However, in an act of political desperation to keep his left-wing base happy, President Obama criticized his own administration’s decision to dump CLASS “leaving advocates scratching their heads”:

OBAMA “AGAINST REPEALING” CLASS, “MIGHT VETO” REPEAL BILL, DESPITE HHS ADMISSION THAT PROGRAM IS “DEAD IN THE WATER”: “President Obama is against repealing the health law’s long-term-care CLASS Act and might veto Republican efforts to do so, an administration official tells The Hill, despite the government’s announcement Friday that the program was dead in the water.

” ‘We do not support repeal,’ the official said Monday. ‘Repealing the CLASS Act isn’t necessary or productive. What we should be doing is working together to address the long-term care challenges we face in this country.'” (Julian Pecquet, “Obama Opposes Repeal of Healthcare Program Suspended Last Week,” The Hill, 10/17/2011)
WHITE HOUSE MAKING CALLS TO REASSURE LIBERALS THAT OBAMA IS “STILL COMMITTED TO MAKING THE PROGRAM WORK”: “Over the weekend, The Hill has learned, an administration official called advocates of the Community Living Assistance Services and Supports (CLASS) Act to reassure them that Obama is still committed to making the program work.” (Julian Pecquet, “Obama Opposes Repeal of Healthcare Program Suspended Last Week,” The Hill, 10/17/2011)

ADVOCATES LEFT “SCRATCHING THEIR HEADS”: “That official also told advocates that widespread media reports on the program’s demise were wrong, leaving advocates scratching their heads.” (Julian Pecquet, “Obama Opposes Repeal of Healthcare Program Suspended Last Week,” The Hill, 10/17/2011)

Democrats counted on CLASS to provide almost half of the phony budget “savings” created by the government takeover of healthcare. Only in Washington could a spending program be counted on for “savings”:

WSJ: CLASS ACCOUNTED FOR OVER HALF OF GOV. HEALTHCARE TAKEOVER’S PROJECTED “SAVINGS”: “And sure enough, CBO, in its final estimate at passage, said that Class would reduce the deficit by $70 billion through 2019—or more than half the bill’s supposed $124 billion 10-year ‘savings’ to the federal fisc. Well, goodbye to all that.” (Editorial, “Class Dismissed,” The Wall Street Journal, 10/15/2011)

BUT CLASS WAS A “FISCAL TIME BOMB” FROM THE START: “Democrats engineered the program known by the acronym Class with front-loaded premiums and back-loaded benefits so that on paper it threw off a lot of revenue early on but then bankrupted itself later … HHS’s own experts were warning Democrats all along that Class was a fiscal time bomb, so including it in the bill was a special act of fiscal corruption.” (Editorial, “Class Dismissed,” The Wall Street Journal, 10/15/2011)