October 15, 2011

Obama admistration abandons a part of Obamacare that can't be made to work.

The NYT reports:
Kathleen Sebelius, the secretary of health and human services, said she had concluded that premiums would be so high that few healthy people would sign up. The program, which was intended for people with chronic illnesses or severe disabilities, was known as Community Living Assistance Services and Supports, or Class....

“We have not identified a way to make Class work at this time,” Ms. Sebelius said. She said the program, which had been championed by Senator Edward M. Kennedy, Democrat of Massachusetts, was financially unsustainable....

When Congress was developing the program in late 2009, Senator Kent Conrad, Democrat of North Dakota and chairman of the Budget Committee, described it as “a Ponzi scheme of the first order” because it required an ever-increasing stream of premiums to cover the cost of benefits.
A Ponzi scheme! I guess it was terrible of Conrad to call it a Ponzi scheme at the time, but now the administration is admitting that no matter how hard they try, they just can't disguise the fact that it's a Ponzi scheme.

The question remains: What are the other Ponzi schemes, the ones you're not yet forced to admit are Ponzi schemes?

Realize that the Class Act was portrayed as a source of revenue in the calculations about the feasibility of the entire health care reform. To go back to that Firedoglake post (discussed earlier today here):
[I]n deep-sixing the CLASS Act, the Administration just forfeited $86 billion in savings on the Affordable Care Act. 
I know... try to get your mind around that.
That’s because the CLASS Act was a net revenue positive in the ten-year window of the legislation, because it collected more in premiums that it paid out in the early years, according to CBO scoring.

So the effective nullification of the CLASS Act costs $86 billion. But it’s unlikely that $86 billion will be made up in any other way. If Congress repealed the CLASS Act, they might have to find offsets. But since the White House just isn’t going to implement the program, the savings won’t be realized but nobody has to worry about paygo or anything. It just blows a hole in the medium-term budget.
Wow. That explanation is head-slappingly weird but you see the point: There was never $86 billion to be used to offset other costs, but it was used anyway.

75 comments:

madAsHell said...

said she had concluded that premiums would be so high that few healthy people would sign up.

Who knew??

David said...

When the fiscal process is fundamentally dishonest, you can justify anything.

Private individuals and companies using these subterfuges would be prosecuted and jailed.

Dust Bunny Queen said...

concluded that premiums would be so high that few healthy people would sign up.

DUH!!!!

David said...

"What are the other Ponzi schemes, the ones you're not yet forced to admit are Ponzi schemes?"

Never worry. The deficit super committee is required by law to have its report by October 23.

Fred4Pres said...

Debbie Wasserman Schultz should point out the Democrats own this mess called Obamacare.

Fred4Pres said...

I bet Joe Biden would say this was a big fucking deal.

Fen said...

Why is this not fraud?

EDH said...

What comes first, the bad policy idea or the supposedly apt acronym?

At this point, like a dog hearing his name too often asscoiated with a scold, I just grab my wallet or my liberty when I hear one.

"The program, which was intended for people with chronic illnesses or severe disabilities, was known as Community Living Assistance Services and Supports, or Class..."

Well we got no class
and we got no principles
and we got no intelligence
We can't even think of a word that rhymes


wv - "garga" = a garish Lady Gaga, if that's possible

Mr. D said...

Does everyone remember when Congressman Joe Wilson got vilified for yelling "you lie" at Obama? Yeah, he had no right to say that....

SGT Ted said...

But, to you, Obama deserves to be seriously considered for a second term?

SRSLY?!

Mitochondri-Allie said...

Precisely WHY private insurance should have no role in a national universal healthcare program. Medicare for all, with all paying a set premium. Or maybe even twice the premium paid now,it would still be far more affordable than private insurance.

Chef said...

"Kathleen Sebelius, the secretary of health and human services, said she had concluded that premiums would be so high that few healthy people would sign up."

This is fundamentally the problem with health insurance - the healthier segment of the population subsidizes the sick, no matter the cost. Hence the individual mandate: it's designed, in no small part, to get the young and healthy to contribute to the system even though they don't use it (much).

What's going to happen when health insurance becomes so expensive that the people claim that can't afford it, even when young and healthy? (Oh, wait...)

Ned said...

SCOAMF...and every IDIOT that voted for him.

iftheshoefits said...

I'm confused about one point:

"She said the program...was financially unsustainable"

When has that ever stopped the federal government from doing anything? Never, not even once, in my recollection.

I'm thinking that there's something else going on here because that's just not a believeable statement coming from an activist left-wing administration.

Dust Bunny Queen said...

Precisely WHY private insurance should have no role in a national universal healthcare program.

Precisely why we should NOT have a government run national health care program. The government can eff up a ham sandwich.

Incompetent boobs who have zero understanding of finances or how anything in the real world works. The housing fiasco (CRA Fannie Freddie) is a prime example.

Richard Dolan said...

"That explanation is head-slappingly weird but you see the point: There was never $86 billion to be used to offset other costs, but it was used anyway."

You can look at this another way. It's clear from Conrad's comment that the politicos behind the CLASS program knew in 2010, when this aspect of ObamaCare was adopted, that it was essentially an exercise in accounting fraud. But the politicos went ahead anyway, and structured the fraud in a way that required CBO to treat the premiums that would be collected before any benefits kicked in as if they reduced the overall cost of ObamaCare in its first 5 years. So it's really a double fraud -- both in itself and in its usefulness in selling ObamaCare generally as a supposedly deficit-reducing program.

From the politicos' perspective, that double fraud permits a lot of happy-talk, and it all comes (so they thought) with political upside but no downside (at least in the near term). That made it the quintessential free good, priced politically at zero, where everything was upside. Party time!

ObamaCare in general hasn't turned out that way, of course, but I suspect the reason is that it's unconvincing at a more visceral level -- it was sold as a version of 'free lunch' economics, and no one believes that can be true even if they don't know why. The specific double fraud that was the CLASS program isn't likely to have a direct political cost for those who pushed it.

The institutional problem is how to internalize the costs of these political misadventures so that the actors (the politicos adopting them) have to act rationally in their own self-interest to avoid adopting them. That is an exercise in holding them accountable, which requires making enough people aware of what they're doing. In an ideal world, that would be the function of polticial journalism. The only source today that might possibly provide that kind of accountability-inducing publicity is on the internet -- places like this. Certainly the NYTimes or the TV networks don't provide it.

Ann Althouse said...

"When has that ever stopped the federal government from doing anything?"

The answer to your question is at the Firedoglake post (which I've fixed the link for):

"Judd Gregg put an amendment on the ACA that said that CLASS had to be self-sustaining without taxpayer funds for 75 years. HHS had to work within those guidelines, and altering that by reducing benefits, at least, would require further changes from Congress. There were probably ways to bargain for lower prices to obtain services or charge a higher premium. But HHS opted to throw the program out instead, judging that a voluntary program would attract more sick customers and cause a death spiral."

edutcher said...

GodZero is currently at 28% approval in WV, down from 32, among all the other states where he's under water.

He's getting scared. Occupy Everywhere ain't workin'.

At this rate, we may not have to worry about getting a repeal through Congress or whether SCOTUS will declare it unconstitutional.

Probably why he's making a big show of sending troops to Uganda - hope he can bump up the 58% approval among blacks.

Fred4Pres said...

Debbie Wasserman Schultz should point out the Democrats own this mess called Obamacare.

Just as she pointed out the Demos own the economy.

ndspinelli said...

Our elite academia President has a staff of elite academics and the fewest number of people who ever worked in the private sector. This is the outcome.

Game 6 of postseason series are often the best. one team trying to get to game 7, the other going for the knockout. Enjoy the 2 games this weekend.

Curious George said...

Herman Cain knew this was a shitburger.

J said...

Not a ponzi scheme, as that cheap ho Coulter keeps insisting. IN fact a ludicrous comparison--the problem is a lack of Fed funding (because of Bushco tax slashes).

Ponzi schemes depend on deception for one, and offer no services (tho may make money for those at at the top of the chain)--increasing costs to a HC program do not entail a crime (even if benefits are reduced--in a working ponzi scheme benefits would increase). It's just teabug slang used to rile up the white trash

ricpic said...

So the beautiful brilliant benevolent lefties, may they rot in hell forever, just realized you can't get blood out of a stone, huh?

SunnyJ said...

J, J, J (head shaking here) your Orwellian double speak attempts to manipulate the language to manipulate the thought. Too late...this one's been exposed big time.

As to why they would do this now...please Lenin's thoughts on "doing what needs to be done in subterfuge or dishonesty" to stay in control. As Lenin would say, you can always lie now and do what you want later.

Robert Cook said...

"Precisely why we should NOT have a government run national health care program."

Oh, but we do: it's called Medicare.

The failing of Obamneycare is that it involves the private health insurers, whose redundnant costs--jacked up to insure a profit--add to the costs of healthcare overall.

A "Medicare For All" program is what we need, paid not by premiums, as such, but through tax revenues, in the way that other public utilities are financed.

After all, who pays for the most expensive military budget in the world?

NYTNewYorker said...

Meanwhile the clock keeps ticking down the minutes until the implementation of this Obama health care abortion.

Do you like my metaphor?

SteveR said...

She said the program, which had been championed by Senator Edward M. Kennedy, Democrat of Massachusetts, was financially unsustainable....

Couldn't see that coming

Michael The Magnificent said...

Queue the obligatory "Downfall" clip.

SunnyJ said...

Seriously...we have a national healthcare program and it's Medicare and we need this for all? Seriously...which part of busted, broke, underwater, bankrupting the nation do you not understand about Mediare and Medicaid?

Medicare and Medicaid are precisely why the government needs to get out of the business...we are losing our proverbial ass in this.

You progressives, never let the facts get in your way, do you?

MaggotAtBroad&Wall said...

Are we a country ruled by laws or are we ruled by men? I want Obamacare either repealed legislatively or deemed unconstitutional by the Supreme Court, but until then isn't it the law? I don't understand how a bureaucrat can unilaterally decide she's not going to enforce the law. It's just like DOMA. The administration is selectively deciding which laws to enforce. Like tyrants do. Why aren't people outraged about the usurping of legislative power?

AJ Lynch said...

Sebelius's college majors, family background and her job history makes her quite qualified to devise plans that fail in the free market.

Christy said...

What forced Sibelius to confess the failure? This is totally out of character for the Obama administration, so what's up? Could it be an attempt to save the rest of Obamacare? If the critics get a few wins will they declare victory and leave the rest alone?

Am I missing something? Seriously. Why would Sebelius admit to this?

Insufficiently Sensitive said...

If Congress repealed the CLASS Act, they might have to find offsets. But since the White House just isn’t going to implement the program,

Obama has been promoted to King?

Congress makes the laws, and the Executive is supposed to enforce them, not to apply a last-minute veto to abolish them.


Tar and feathers.

edutcher said...

MaggotAtBroad&Wall said...

Are we a country ruled by laws or are we ruled by men? I want Obamacare either repealed legislatively or deemed unconstitutional by the Supreme Court, but until then isn't it the law? I don't understand how a bureaucrat can unilaterally decide she's not going to enforce the law.

Eric Holder does it all the time.

It's the Chicago Way.

Robert Cook said...

"Seriously...which part of busted, broke, underwater, bankrupting the nation do you not understand about Mediare and Medicaid?"

Which part of those are lies perpetrated by those who want to dismantle social welfare programs do you not understand?

Sue D'Nhym said...

Althouse is finally learning liberal economics.

But she'll remain a liberal, regardless.

Tim said...

"The question remains: What are the other Ponzi schemes, the ones you're not yet forced to admit are Ponzi schemes?"

Pretty much all the social welfare programs, which have locked in (and adjusted for cost of living) benefits, depending upon future revenues from the earnings of a shrinking workforce whose earnings will be choked by federal and state labor and environmental regulations, and increasingly confiscated to pay off our $15 trillion and growing by $1 trillion annually debt.

America's future won't be anything like its past.

AJ Lynch said...

SteveR:

LMAO at your Kennedy comment.

Tim said...

"But, to you, Obama deserves to be seriously considered for a second term?

SRSLY?"!


90 to 95% of '08 Obama voters will do so again. Mostly because they either hate Republicans or value their self-image as the kind of people who voted for Obama more than they love America.

Poverty is o.k. if the president is a "progressive."

Insufficiently Sensitive said...

-J-

Ponzi schemes depend on deception for one

Don't be disingenuous. It is a Ponzi scheme, even down to the deception item. Congress built that into the fakery that allowed the CBO to score it as a positive $86 billion. Now even Kathleen Sibelius has admitted that the ever-increasing payments into CLASS won't materialize under a 'voluntary' program. So the Ponzi scheme just collapsed before it ever began. You may give humble thanks for her forced candor.

Would you like to contribute to the Tar and Feathers fund?

Roger J. said...

surely someone has done one of the Hitler clips when he learns the plan didnt work

pm317 said...

So Ted Kennedy the dead guy is to blame for this 'faux pax'! Always the buck stops elsewhere.

sorepaw said...
This comment has been removed by the author.
sorepaw said...
This comment has been removed by the author.
edutcher said...

Roger J. said...

surely someone has done one of the Hitler clips when he learns the plan didnt work

And an Elizabeth Warren caption. Wait till around 1.

Chef Mojo said...

Actually J, it's far worse than a Ponzi scheme. Participation in Ponzi schemes is voluntary.

With SS, the government holds a gun to your head, forcing you to participate in their scheme.

Dust Bunny Queen said...

"Precisely why we should NOT have a government run national health care program."

Oh, but we do: it's called Medicare.

Thank you for proving my point.

Badly run program. Rife with fraud and corruption. Basic coverage, covers not much of anything. Needs to have private insurance to supplement it. Driving doctors and medical clinics out of business. Used as a welfare slush fund and is going bankrupt because it.

Paco Wové said...

"Congress makes the laws, and the Executive is supposed to enforce them..."

The executive branch has been very selective in its enforcement of immigration law for some time now, so this isn't a new phenomenon.

SteveR said...

So maybe this is a bone they throw in the Deficit Reduction SuperCommitee.

End a program that was supposed to be self financing but wasn't.

Calypso Facto said...

Althouse: "Judd Gregg put an amendment on the ACA that said that CLASS had to be self-sustaining without taxpayer funds for 75 years."

Thank you for clearing up my question about executive voluntary "abandonment" of a legislative act since I first read this yesterday.

And thanks to Senator Gregg:

The federal government’s unfunded liabilities for existing entitlements are already staggering at $70 trillion, or approximately a $600,000 burden per American household. By setting premiums at unrealistically low levels, the CLASS Act would have made this entitlement crisis worse.

To eliminate these problems, I offered an amendment, which was ultimately accepted, that would require that CLASS Act premiums be based on a 75-year actuarial analysis of the program’s costs. My amendment ensures that instead of promising more than we can deliver, the program will be fiscally solvent and we won’t be passing the buck — or really, passing the debt — to future generations.


Now where's "Obamacare reduces the deficit" garage mahal?

gerry said...

So Class is dead.

A Ted Kennedy idea.

Both are now dead.

We are just screwed.

By a dead man who had shitty ideas.

Balfegor said...

That explanation is head-slappingly weird but you see the point: There was never $86 billion to be used to offset other costs, but it was used anyway.

I think what's head-slappingly weird is that commentators are treating these as real "savings," or budget-reduction when all they are is an offset between revenues and associated expenditures. It's precisely the sort of gimmickry that accrual accounting (which the government does not, of course, use) is designed to avoid. Companies get sued all the time for fraud for playing games with revenue recognition like this. So when the commentator writes:

So the effective nullification of the CLASS Act costs $86 billion.

Is he being disingenuous? Or does he really think that?

Balfegor said...

Sorry, I meant time-offset, not same-period offset.

traditionalguy said...

A president who can do the math himself would be refreshing. No more, oops that was unexpected.

Cain can.

Calypso Facto said...

A president who can do the math himself...

Remember, it's not politics, "it's math!" Shame he didn't recognize that during the Obamacare debate.

Robert Cook said...

Regarding Medicare:

"Badly run program. Rife with fraud and corruption. Basic coverage, covers not much of anything. Needs to have private insurance to supplement it."

That a program can be criticized for how it is run does not invalidate the program; it merely provides a basis to improve the management of the program.

Most of the fraud and corruption is found not in the Medicare administration itself but in the health care providers themselves-- doctors--who, well-educated and well-compensated though they are, cannot contain their greed. Again, this just provides reason to improve the fraud detection in the program, and no reason to eliminate the program itself.

(It's axiomatic: any program that involves, either as the primary goal or as a secondary aspect of its functioning, the transfer of money from one entity or entities to another entity or entities, will invite fraud. This is a failing of human beings and not of the instrumentalities we devise.)

As for Medicare offering only basic coverage and requiring supplemental insurance, this can be fixed by changing the program to provide comprehensive coverage. This is not a bug but a feature that has been built into the program, a sop to the private insurers.

Synova said...

But, but...

The IMPORTANT thing is to raise awareness of the problem so that politicians can be forced to listen to your desire. You're a voter! This is a democracy!

And what's more, you are NOT required to come up with answers or explain where the money is coming from.

That is someone else's job.

And those awful hateful horrible people who don't want to have this program? They just hate people or else they'd support it.

Harrowgate told me in the OWS anti-Semitism thread that NOTHING BAD can possibly happen when people advocate this way for a better world. When awareness is raised and villains and problems are identified. People with medical problems need health care!

And someone else can figure out how they're supposed to get it.

We all DID our part and can't be expected to actually figure out the numbers or do the math or explain who is going to pay for what we believe ought to be free.

Henry said...

Ms. Sebelius said ... the program ... was financially unsustainable....

And?

J said...

No Sunny scum--you don't understand the comparison dimwit. Ponzi schemes area..crimes,see...HC might be bureaucratuc (even corrupt..that would be "fraud" dreck) but has nothing to do with ponzi scheme. Like most teabugs you're just too stupid for politics.

sorepaw said...
This comment has been removed by the author.
sorepaw said...
This comment has been removed by the author.
Seeing Red said...

Which part of those are lies perpetrated by those who want to dismantle social welfare programs do you not understand?



Nor adjust to the new realities in a new century.


To some, deducting one penny is dismantling.

J said...

Sorepaw---jerking off with yrself again ,eh wicca swine?

Yr game's about to end.

cubanbob said...

Robert Cook said...
"Precisely why we should NOT have a government run national health care program."

Oh, but we do: it's called Medicare.

The failing of Obamneycare is that it involves the private health insurers, whose redundnant costs--jacked up to insure a profit--add to the costs of healthcare overall.

A "Medicare For All" program is what we need, paid not by premiums, as such, but through tax revenues, in the way that other public utilities are financed.

After all, who pays for the most expensive military budget in the world?

10/15/11 10:39 AM

The majority if us who aren't communists don't see profit as a dirty word. Most utilities are government run and the ones that are ought ti be privatized. Now as for Medicare and Medicaid, setting aside the fact that your health care payments are your obligation and not mine, the amount of profit earned by medical insurance companies pales into insignificance compared to the estimated Medicaid and Medicare fraud, a lot of which is mandated by Congress as a payoff to certain interest groups and by Congress unwillingness to fund fraud checking and prosecutions like the private companies do since they have a vested interest in their money unlike the government that exists mainly to piss away the taxpayers money.

Ask any med-malpractice lawyer just how cooperative Medicare and Medicaid are in providing billing information that if there is a recovery the first recovery goes to the payer versus private insurance companies response to the attorney's request for records.

cubanbob said...

Robert Cook said...
Regarding Medicare:

"Badly run program. Rife with fraud and corruption. Basic coverage, covers not much of anything. Needs to have private insurance to supplement it."

That a program can be criticized for how it is run does not invalidate the program; it merely provides a basis to improve the management of the program.

Most of the fraud and corruption is found not in the Medicare administration itself but in the health care providers themselves-- doctors--who, well-educated and well-compensated though they are, cannot contain their greed. Again, this just provides reason to improve the fraud detection in the program, and no reason to eliminate the program itself.


Efficiency and competence are not the government's strong suit. The fraud exist because the government encourages it. The doctors multiple bill because of the crappy reimbursement rates. Others run fraud mills because they know they can get away with it since the auditing by the government is so poor compared to a private insurance company's auditing.
Then there is the bid-rigging aspects of the Medicare-Medicaid. The programs as they currently exist are in a death spiral and can't be saved.

Robert Cook said...

"The majority if us who aren't communists don't see profit as a dirty word."

Profit isn't a dirty word, but neither is it the only or highest value or always the best driver of action.

"Most utilities are government run and the ones that are ought ti be privatized."

Says who? Why? How would public utilties be improved or made less expensive if they were privatized?

Now as for Medicare and Medicaid, setting aside the fact that your health care payments are your obligation and not mine...."

So...are you going to opt OUT of Medicare when you reach retirement age, and refuse to enroll in it? If you were suddenly to become financially devastated, would you forego Medicaid if you or a family member needed medical attention?

We are none of us a society of one, and if we live in a society of other people, we do, actually, have mutual obligations to one another. If we had a Medicare for All medical system, your tax dollars benefit me, certainly, but mine benefit you, as well. The collective sharing of costs mitigates the expense for all.

I certainly can't convince or compel you to agree with this view if you disagree; I can only point out that it is not a matter of you paying for me, it is a means by which we all pay for each other.

Mitochondri-Allie said...

Guess who opted out of Medicare until she was dying of cancer? How man conservatives will tell their Granny or aging parents to refuse their Medicare? How many Conservatives would be willing to pick up the costs of their parents healthcare? Plenty of middle to low income Tea Party seniors out there that held signs at Tea Party rallies,reading "Keep Government out of my Medicare!"

poppa india said...

Of course we want our Medicare, after we were forced to pay into it most of our working lives. Arrange to refund that money plus the interest it could have earned, and lots of us would be happy to be out of the program.

SunnyJ said...

J,J,J...(more head shaking here)...you know it pleases us when you lauch into the name calling.

I think the one with the over reaction owns the problem, don't you?

Regardless of the drama, antics, and name calling...still no facts.

Why is Sebilius doing this now? Because no self serving progressive would not disown their own mother if it would keep them in control...Obama's relection is imperative to the grand scheme. They know they can lie, cheat and steal and continue the dismantling but, first...he must get reelected. So they throw parts of Obamacare under the bus as a salve but, in true double speak tradition they'll be denying it at the very same time somwhere else.

A bit like it's cocktail hour somewhere in the world all the time.

SunnyJ said...

Oh, and R Cook...WTF are you talking about? If all it needed was tweaks and the gov't were capable of doing that, why hasn't it been done all along?

Obamacare was just a placeholder anyway, with little nuclear bombs throughout that dismantle any possibility of going back...like this budget buster 89 billion that was that wasn't it. Yeah, let's just have some tweaks, that'll fix it right up.

And one more thing...enough with the greed bullshit. It's greedy to want and covet what is not yours and what you have not earned. Greed isn't just for megamillionaires...you can be a greedy gutter snype too! It's greedy to run to the doctor and the emergency room whenever you want too, for every test and every little thing, costing the rest of us millions. Capitalism is not corruption. Everyone that makes a profit, and big profits is not greedy. Everyone that doesn't have a pot to piss in is not exempted from being greedy. There is a law of money that the more you give away, the more that comes to you.

Paul said...

"The deficit super committee is required by law to have its report by October 23."

and if they fail to meet that deadline do they jail them? If they give BS report do they jail them (or reduce their salary?)

No??

And so Obamacare has had it's first death panel. And the panel decided to kill long term care. Yes there will be no underwriting of long term care so that means those with extraordinary illness are just left to die.

But we knew from day one Obamacare was Pie-in-the-skycare, right?

PatCA said...

If only we could collect "premiums" for another 50 years or so before paying out, everything would be peachy.

ken in sc said...

The subtext here is that since enough people will not sign-up voluntarily, we will have to re-group and find a way to make them sign-up. These kind of plans always result in some form of coercion.

Phil 3:14 said...

Long term care for the infirm elderly is a huge problem.

This was NOT the solution.

Freeman Hunt said...

Since the government makes up its own math, ethics, science, etc., I don't see why there should be any educational requirements in working for the government.

AllenS said...

Mitochondri-Allie said...
Precisely WHY private insurance should have no role in a national universal healthcare program. Medicare for all, with all paying a set premium.

I'll turn 65 next month and will qualify for Medicare. I won't be paying for it, but what they are going to do is take the premium out of my Social Security check.

They say that it will cost me $115.40 a month. I was receiving $1,469.00 a month for Social Security, and now I'll be receiving $1,353.00. Notice that they rounded off the .40¢ to an even $116.00. Bastards.