Report: Administration IGNORED High Costs In Healthcare Bill

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Report: The Administration Ignored High Costs In Healthcare Bill

By Amanda Carey - The Daily Caller

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"In the thick of the debate over President Barack Obama’s health care reform bill, administration officials ignored warnings that one of its most controversial provisions was financially unsustainable and could leave taxpayers on the hook for billions of dollars.

According to a report released Thursday by a working group of congressional investigators, officials inside the Department of Health and Human Services ignored numerous red flags about the Community Living Assistance Services and Supports program (CLASS) — and in some cases the officials went to work figuring out how to hide them.

Now, those same officials are scrambling to come up with the financing of the long-term care insurance program — the brainchild of the late Democratic Sen. Edward Kennedy of Massachusetts — which Republicans on Capitol Hill are trying to repeal.

When the Congressional Budget Office scored the program, analysts said it would account for $70 billion in deficit reduction over ten years. However, that was because those enrolled in the program won’t be able to start receiving benefits until five years into that ten-year period.

The program’s architects assumed it would take in more money than it paid out. And the $70 billion in savings became a crucial selling point that helped secure the bill’s passage.

The congressional working group, however, found that since the program is voluntary it would likely see more unhealthy participants than healthy ones. That means more payouts and less revenue. In the long run, that imbalance puts the CLASS program on a path to financial disaster.

In May 2009, Center for Medicare and Medicaid Services chief actuary Rick Foster wrote an email about that exact sticking point, saying it could be a “terminal problem for this proposal” and “a classic ‘assessment spiral’ or ‘insurance death spiral’ would ensue.”

“The program is intended to be ‘actuarially sound,’ but at first glance this goal may be impossible,” Foster added.

In the summer of 2009, Foster and a legislative staffer exchanged emails. At that time, the actuary’s doubts about the program hadn’t changed.

“I’m sorry to report that I remain very doubtful that this proposal is sustainable at the specified premium and benefit amounts,” read one email, according to the report. “Thirty-six years of actuarial experience lead me to believe that this program would collapse in short order and require significant federal subsidies to continue.”