No, the Failure of CLASS Does Not Suggest that the Rest of ObamaCare Will Be a Success


Last week saw the clearest policy victory for opponents of ObamaCare so far: After months of pressure, the Obama administration finally admitted that implementing the CLASS long-term care program was not viable; they shuttered the program.

In response, liberals defenders of ObamaCare have admitted that CLASS was poorly designed. But they've argued that critics of last year's health care law don't have much to celebrate. After all, CLASS was a program of unusual uncertainty that was not an integral part of ObamaCare's larger universal coverage scheme. If anything, they've argued, doesn't the administration's decision to shut down CLASS prove its commitment to good governance, and show that the system works?

Here for example, is Jonathan Cohn of The New Republic, who graciously noted that critics of CLASS were right to focus on its flaws. But he doesn't think that tells much about what we can expect from the rest of ObamaCare:

Doesn't this call into question the rest of the law? It shouldn't. For one thing, the estimates on long-term care always involved unusually high uncertainty, because the evidence on how such policies work is relatively thin and the insurance product itself was unusual. There's just wasn't that much experience on which to base actuarial models.

But that's true of the budget projections made for the rest of the law as well. Anyone who wants an overview of how complex estimating the effects of a comprehensive health care overhaul can be should read former Congressional Budget Office director Robert Reischauer and Linda Billheimer's 1994 Health Affairs essay, "Confessions of the Estimators: Numbers and Health Reform," which explains step-by-step how they estimated the effects of President Clinton's proposed health overhaul.

Much of what they had to do was set up a working model of the American health care market, with numerical values for dozens of interrelated factors. For many of the factors, they had incomplete data. For others, they had data that was imperfect, or didn't quite provide the exact measurement they needed. For other factors, they had no good data at all. So they did the only thing they could. They guessed. That's not intended as a slam on the CBO; all things considered, the guesses they made were probably pretty good. Instead, it's intended to highlight the tremendous uncertainty of the process.

We have some better estimating tools now than we did. But that just means the models have become more complex. And that means more uncertainty, and more opportunity for the projections to miss their mark.

Here's Mother Jones's Kevin Drum, meanwhile, making the second point—that CLASS tells us how committed the administration is to governing honestly:

What happened here is that government worked exactly the way it ought to. The CLASS Act was passed in a fog of rosy estimates and emotional appeals (it was one of Ted Kennedy's longstanding priorities), and the Department of Health and Human Services immediately began the detailed work of writing the implementing regulations to get it up and running. And guess what? They did their work honestly and conscientiously.

This may be true of the folks who worked in the now-closed CLASS office set up after the law passed. But it wasn't true of the administration or other Democratic backers of the law while they were working to get it passed. In May of 2009, Richard Foster, Medicare's chief actuary wrote an email to a number of Health and Human Services staffers who were, according to the AP, working with Congress to ensure that CLASS was included in the final health care legislation. He offered a quick take on the program, but the message was clear: "This proposal doesn't look workable," Foster wrote. A few months later, in October 2009, a senior Obama administration official on aging policy ran the numbers and reported to Congressional Democrats that CLASS "seems like a recipe for disaster."

So there's no question that both the Obama administration and Democrats in Congress were alerted that the program was a mess. Indeed, according to Cohn, in internal discussions, several administration officials "argued against including it, precisely because they were worried about the finances and sustainability."

They knew the program was a disaster. They knew the numbers didn't add up. Yet many of them made all sorts of claims to the contrary. And in March, 2010, they passed it—along with the rest of ObamaCare—anyway.

This does not strike me as particularly "honest" or "conscientious." The administration saw $70 billion in deficit reduction that they could tack onto the law, and they took it.

Even if you accept the idea that the program was included in the final law strictly out of some emotionally driven desire to honor Sen. Ted Kennedy's legacy, it still doesn't excuse what happened with the program. (How much lost taxpayer money is Kennedy's legacy worth?)

Nor does the timeline reflect particularly well on the trustworthiness of those behind the rest of the law. A quick recap: The administration and its Democratic allies in Congress passed CLASS under the pretense that it was fiscally sound, knowing full well that it wasn't. Eventually, faced with a slew of criticism, including a recommendation from Obama's own deficit panel that the program should be shut down, HHS Secretary Kathleen Sebelius admitted that it wouldn't work as written, but assured Congress that she had the power to fix it—despite clear evidence that her agency was worried that she didn't have the power. Only after Republican investigators revealed documents showing that the Obama administration and Democratic leadership knew about the problems for months before passage did HHS shut down the CLASS office—and then the administration wouldn't even admit that it was shut down. Now the administration has agreed not to implement the program, but for no real reason still refuses to support repeal. This is not exactly a reassuring chain of events. 

Obama and his allies passed one part of ObamaCare while making promises about its fiscal stability they knew were wrong. Why shouldn't we suspect that the same of the rest of the law?