"The welfare of humanity is always the alibi of tyrants" - Albert Camus

Monday, October 17, 2011

Is the Dismissal of CLASS an Indication of Obamacare's Overall Unsustainability?

Last week, we witnessed the Administration's dismissal of a major segment of Obamacare called The Community Living Assistance Services and Supports (CLASS).  CLASS was to be sponsored by the federal government but maintained as a voluntary plan to which healthy, younger, working Americans would contribute in the event they became disabled later on in life. Participants would have paid a monthly premium that ranged widely between $235-$3000, depending on income, during their employment years, and then collected a daily cash benefit of at least $50 if they became disabled.

Why did the Administration announce that CLASS was being dismissed?  Unsustainability.
The program was fatally flawed because healthy, young people would need to subscribe to the plan for the premiums to be reasonable for all participants.  Unlike the purchase of long term care insurance in the private sector, CLASS did not offer lower premiums to healthier participants.  Thus, the program would likely attract those who were already disabled in some way, yet able to work to some extent, and who anticipated the need for long term care in the future. Without healthy subscribers paying into the system, these individuals would not likely be able to afford the steep premiums.

Of course, it goes without saying that, had the program survived, it would likely require a costly tax payer bail-out as the premiums collected (due to low level interest on the part of healthy individuals) could never suffice the costs incurred by those recieving payments.  The same "too big to fail" - or too vital to let it fail - mentality as Medicare is concerned is currently bankrupting our nation.
What does the admitted unsustainability of CLASS tell us about rest of Obamacare that astute observers have known since the beginning?
First, the penalty for not carrying insurance under Obamacare is not sufficient for the healthy and the young to acquire healthcare insurance or change their habits.
Second, Obamacare dictates what services must be included with acceptable plans.  This includes all sorts of services not currently covered under insurance plans (for birth control, etc.).
Third, Obamacare will increase demand on healthcare services as subsidizing a service always increases the demand for it.
Finally, taxpayers will have to subsidize the ever increasing costs of Obamacare if the health insurance system is to be kept semi-privatized.  The hope of the progressives is that the system will become too costly and necessitate the final cross-over to a single payer, government run system as the President envisions.
All indications point toward the unsustainability of Obamacare.  If allowed to stand by the SCOTUS, Obamacare will surely cost many times the rosy projections of this Administration.  We may have dodged a bullet with the dismissal of CLASS but, if even Medicare does not bankrupt us, Obamacare certainly will.

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