A critical piece of the health reform legislation was dropped earlier this week by Obama Administration officials due to cost concerns–a recurring theme of late as the Super Committee struggles to find savings, and the American economy struggles with stagnation due to economic uncertainty. This is largely due to rising health care costs and entitlement spending. The CLASS act was a piece of legislation championed by the late Edward Kennedy (D-MA), and one that was included in the Affordable Care Act largely out of respect for the Democrat icon, despite opposition from the Obama Administration over financial solvency.
The Community Living Assistance Services and Supports Act (CLASS Act) would have created a voluntary Long-Term Care (LTC) public insurance option for employees, which would be funded through the premiums of the beneficiaries. The thought was that this could save some money in the Medicaid program because such a large part of budget in said program goes to covering Long-Term Care for millions of Americans. Anyone who has had a friend or loved one in a nursing home can attest to the fact that this can be quite expensive. So it is no surprise that policy experts had their reservations.
While the intention was good, there were legitimate concerns from both sides over the sustainability of creating such a program, and it was determined by the Department of Health and Human Services to not implement this provision.
Similar problems have occurred at the state level with the high-risk insurance pools, the program intended provide coverage for individuals with pre-existing conditions prior to 2014 when it becomes mandatory for all insurance companies to do so. Insurance programs like these need a large population to spread the risk. When the only people who utilize these programs are those that need them the most, in this case those individuals who are sick, premiums become too high, which crowds out healthy individuals who may opt to spend their money on other things.
While this may not seem to be a large issue on the surface, let me remind you of the importance of momentum, public opinion and political will in American politics. Having a piece of the law overturned, provides additional fuel for the opposition. Republicans staked claim against the legislation a long time ago for various reasons, mostly because of long term cost concerns to taxpayers and businesses. Democrats passed this legislation almost entirely along party lines, so they have an incredible vested interest in its outcome. It will be interesting to see how things play out, as this is just the beginning of the overall repeal effort.
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