CBO Makes It Official: Repealing ObamaCare's Long Term Care Benefit Won't Increase the Deficit


Earlier this week, the Congressional Budget Office officially confirmed that repealing the CLASS Act, ObamaCare's shuttered long-term care benefit, would not increase the deficit. As CLASS began to collapse, there was initially some concern about this. The program was scored to reduce the next decade's deficit thanks to the collection of early premium revenues. So shouldn't repealing it increase the official deficit projections? 

That would have been the case over the summer, before the administration announced that it would not be implementing CLASS, but not anymore. As CBO explained in its letter to Sen. Thune, it changes its budgeting projections based on new information from program administrators: 

If the new information indicates that something definitely has happened or definitely will happen (such as an agency issuing a final rule, or an official announcement clearly defining an intended Administration action—such as the HHS Secretary's announcement on October 14), CBO incorporates that information in its next regular baseline update. It also immediately takes that information into account when analyzing legislation being considered by the Congress—even if it has not published new baseline projections.

Despite the fact that the program, as designed, was widely understood to be a complete train wreck that would eventually add billions to the deficit, even some Republican legislators were wary of voting to repeal a bill that officially reduced the deficit. But that shouldn't be a problem anymore. Because the administration has said it won't be implementing the program, CBO no longer expects to collect any revenue as a result of its operation. Consequently, repealing it wouldn't have any official effect on the deficit at all. 

This is good news, although it still may not lead to repeal since the administration, despite admitting that it is unable to implement CLASS in a fiscally responsible way, continues to oppose actually erasing the program from the books. 

It's also a lesson in the power of the Congressional Budget Office in Washington legislating. Even after virtually everyone admitted that the program was totally unworkable and destined to add to the deficit in the decades after its implementation, Republicans who opposed the program were nonetheless resistant to killing it—not because of its important long-term effects but because of how the CBO scored its deficit effects in the next ten-year window.  

Lots more on the power of the CBO in my 2010 magazine feature, "The Gatekeeper."