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Obamacare's Fundamental Dishonesty

1:30 PM, Oct 19, 2011 • By MARK HEMINGWAY
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In yet another classic Obama administration Friday night news dump, the administration abandoned the CLASS Act last week. The progam was a major component of the Obamacare law, intended to address long-term care issues. While long-term care costs are a significant problem, the CLASS Act was a disingenous budget gimmick from the start.

It was designed as a voluntary insurance program run by the government. But the way the CLASS Act was to be implemented was problematic. The program was set to collect premiums for five years before it began paying out benefits, taking in a lot more money than it would pay out over the initial 10-year window the Congressional Budget Office (CBO) uses to determine how much a piece of legislation will supposedly cost.

The CLASS Act made no actuarial sense beyond that narrow budget window, and the White House was forced to concede as much and kill the program, along with the $53 billion in alleged deficit savings it was said to produce. Jonathan Cohn at the New Republic issues something of a mea culpa:

The official budget estimates for CLASS suggested it would save money in the first ten years, accounting for about half of the deficit reduction that the Affordable Care Act was supposed to yield during that time. But the estimates for CLASS were never that reliable. More important, after those first ten years, CLASS was likely to pay out more in benefits than it collected as premiums. For these reasons, conservatives like Peter Suderman who criticized CLASS as unsustainable were right to raise alarms, while liberals like me were wrong to ignore them.

Well, kudos to Cohn for forthrightly admitting his error, but don't worry about patting Cohn on the back too hard just yet -- here comes the pivot. To Cohn, the problem with the CLASS Act was not that it was a bad idea or that it undermines case for the whole health care law, but that the Obama administration should have rammed it down our throats harder:

But if the CLASS Act had a potentially fatal design flaw, shouldn’t we assume the Affordable Care Act has the same one? No – precisely the opposite is true. The sustainability of CLASS would not have been in such question if everybody had to sign up for it. In other words, if long-term care insurance were subject to an individual mandate, old and sick people would not have been the only people enrolling.

Right. Because Obamacare's one existing insurance mandate is a major constitutional question that may well invalidate the entire law, to say nothing of the fact Americans generally oppose the idea of insurance mandates, so why not just add another forced insurance scheme to the pile?

In any event, Cohn doesn't address the real problem with the CLASS Act's failure, and one that goes along way toward explaining why Americans hate the law -- the repeal of the CLASS Act is an implicit admission that Democrats were dishonest in making their case for the law.

One of the major arguments in favor of Obamacare was that it would save money. Buying into this mean you had to believe that the federal government was capable of remaking how a fairly large sector of the economy does business and producing a more cost-effective and efficient health care system. That this result would even be possible pretty much flies in the face of what the average American believes about the federal government's capabilities. And yet, the Democrats kept trotting out CBO numbers to make their case.

Of course, Republicans and Obamacare critics have been loudly attacked for suggesting that Democrats were using budget gimmicks to make the health care appear more fiscally responsible than it is. Let's take a trip down memory lane with Ezra Klein, who bemoaned "The Republican war on the CBO":

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