Obama's HHS ends controversial program in health reform law

The Obama administration is giving up on a controversial piece of the healthcare reform law.

Officials from the Health and Human Services Department said Friday they will not keep trying to implement the CLASS program, which had long faced criticism from Republicans and skepticism within HHS.

“We won’t be working further to implement the CLASS Act … We don’t see a path forward to be able to do that,” Assistant Secretary for Aging Kathy Greenlee told reporters.

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CLASS is by far the biggest piece of healthcare reform to meet its end, and also the first to collapse entirely on its own. Republicans successfully repealed one much smaller provision, and the individual mandate could be struck down by the Supreme Court. But HHS officials acknowledged that CLASS fell apart simply because it was too flawed to salvage.

Republicans said the CLASS program won’t be the last piece of healthcare reform to fall apart. 

“This announcement is a canary in a coal mine,” Sen. Orrin Hatch (R-Utah) said in a statement. “Today’s abandonment of the program is just the latest evidence demonstrating ObamaCare's devastating effects and ill-conceived policies. What will be next?”

By scrapping the CLASS Act, HHS is losing about 40 percent of the savings healthcare reform was supposed to generate. The Congressional Budget Office’s most recent estimates projected $210 billion in total deficit reduction from the healthcare law, $86 billion of which would have come from CLASS.

HHS officials emphasized Friday that the healthcare reform law is still projected to cut the deficit, since about $125 billion of the most recent savings estimates are still intact.


The decision to shelve the program comes after intense criticism from congressional Republicans, who have long insisted that the CLASS Act was an unworkable financial gimmick designed to get healthcare reform passed.

Several centrist Democratic senators spoke out against the CLASS Act during the healthcare reform debate, raising concerns that it would not sustain itself and would eventually add to the deficit.  

Rep. Paul Ryan (R-Ind.), chairman of the House Budget Committee and a staunch critic of the reform law, said the administration finally "surrendered to reality."

"The smoke and mirrors that the Democrats employed to sell their health care overhaul are finally falling away, one broken promise at a time," Ryan said in a statement. "When all of these gimmicks are stripped out, the new law would add hundreds of billions of dollars in red ink over the next decade, as health-care costs send the debt spiraling out of control. 

"Now it is time for Congress to do the responsible thing: Repeal the disastrous new law and replace it with true, patient-centered reforms," he said.

A spokesman for Speaker John Boehner (R-Ohio) said Democrats were always "cooking the books" with the healthcare law.

“We have always known that this program was a naked scam — cooking the books trying to cover up the unsustainable cost of Washington Democrats' government takeover of health care," spokesman Michael Steel said. "Today's announcement reinforces the need for the Senate to take up the House-passed repeal of the whole law, so we can replace it with commonsense reforms that will actually lower costs."  

HHS made the announcement of the program's demise late Friday afternoon, traditionally a dumping ground for news the administration wants to downplay.

The White House said the decision does not reflect problems with other parts of the healthcare law.

“The CLASS program is a unique, stand-alone program," an administration official said. "Long term care is important and it’s something we are committed to addressing, but drawing conclusions between this and other parts of the law simply doesn’t make sense.”

The department said a detailed analysis of the CLASS program showed that it simply couldn’t be made to work. Premiums would have been too high to attract enough interest to keep the program afloat.

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CLASS, which had been a pet cause of the late Sen. Edward Kennedy (D-Mass.), had faced persistent skepticism. HHS recently reassigned the employees in the office that was implementing the CLASS Act, and congressional Republicans released e-mails showing that HHS officials voiced serious concerns about the program even before it became law.

HHS Secretary Kathleen Sebelius notified House Speaker John Boehner (R-Ohio) of the decision earlier Friday. 

Although the need for better long-term care isn’t changing, Sebelius said, the CLASS Act ultimately wasn’t going to be the answer. She said HHS did everything it could to find a plan that would work, and now has a better understanding of long-term care, but that “despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.”

—Last updated at 6:15 p.m.

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