Last week, Secretary of Health and Human Services Kathleen Sebelius announced they were halting the implementation of the CLASS program. An amendment to ObamaCare required the department to certify the program’s solvency before moving forward with implementation, and the department could not determine a way to make the program sustainable. Thus, implementation has been halted. After repeated warnings from conservatives, HHS officials, and Medicare’s chief actuary, this announcement certainly came as vindication of the critiques that this program was unworkable. However, the policy’s drafting is an example of the progress fiscal conservatives have made on entitlement policy.
CLASS was a new entitlement program that intended to provide home health care to elderly and disabled individuals. What made CLASS different from other entitlement programs was the added policy that before the program could be administered the Department had to demonstrate that it was actuarially sound over a 75-year time period. This is a common sense policy to require that we have the money to pay for a long term entitlement program before it begins. Also, this policy is indicative of the influence fiscal conservatives have had on the entitlement debate. Prior to CLASS, 75 year projections were not required to begin entitlement programs. In fact, we would live in a very different world if they had.
Medicare was started in 1965 as an entitlement program that would provide health insurance benefits to America’s elderly paid for through contributions from their income prior to the years they need the benefits. If Congress had required HHS to demonstrate the solvency of Medicare Part A through 2040 they would likely have not begun the program. As of this year the Medicare Part A trust fund is slated to officially become insolvent in 2024, 16 years prior to the end of the 75 year window from the beginning of Medicare. Even before the current recession, the Medicare Part A trust fund was slated to become insolvent in 2029.
The delay of the CLASS Act was a victory for taxpayers and free market health care advocates. It also stands as a testament to the influence of fiscal conservatism on the drafting of bills in Washington.
– Spencer Harris