By Kelly Sloan

The announcement a week ago by Administration officials of the demise of the Community Living Assistance Services and Supports (CLASS) Act was welcome news, not only because it was a fiscal nightmare, but because it has the potential to illuminate the inherent fallacy of so many similar liberal schemes.

The CLASS Act, one of the contrivances of the late Ted Kennedy, was part of the Affordable Care Act, the massive health reform bill passed in 2009, and touted by proponents as a “deficit reduction measure”.  As such it came to epitomize the creative financial machinations employed to disguise the costs of Obama’s health plan, and the type of budgetary chicanery that has become de rigueur in Washington.

CLASS was a voluntary, long term care insurance plan that was set up to collect premiums for 5 years before disbursing any benefits. Since the CBO calculations only project out 10 years, the numbers on paper actually made the program look like it was making money. This pecuniary sleight of hand could only go so far, however, as Health and Human Services Secretary Kathleen Sebelius painfully admitted last Friday, in a letter to Congressional leaders informing them that she did not see “a viable path forward” for implementing the program.

Of course she didn’t. CLASS was the very definition of a financially unsustainable government debacle. As a voluntary program, only those most likely to draw benefits would, in all likelihood, sign up for it. Absent a politically and morally impossible mandate, there would never be enough young, healthy workers paying into it sufficiently to compensate for the actuarial risk. This would mean higher premiums, further reducing the number of enrollees (not to mention breaking faith with the intent of providing low cost long-term care insurance), and resulting ultimately in taxpayer subsidization and higher deficits. It was destined to become, through structural defect, nothing more than another attempt to alleviate a social woe, or help a particular demographic group, by tossing federal dollars at it.

The abandonment of CLASS does not bode well for the survival of Obamacare.  The gimmickry used to claim deficit reduction ability, and the fact that it was enacted through the Affordable Care Act, are not coincidental. CLASS accounted for nearly half of the purported $143 billion in deficit reduction that the health reform bill was to have delivered. The revelation of the actuarial frailty of the CLASS Act concurrently revealed Obama’s health care plan to be much more expensive than claimed.  

Also prominent is the question of an individual mandate. Just as the (happy) absence of an individual mandate undercut any pretenses of budgetary soundness from CLASS, so too does Obamacare rely on the individual mandate to approach even the illusion of feasibility. But here the scheme may run into the law, as there exist serious questions about the constitutionality of such federal interference in the question of personal economic decisions. Serious enough that the administrations sole hope is that 5 Supreme Court Justices will inject as much latitude in constitutional interpretation as the President does.

It is somewhat remarkable that at least some liberal Democrats have admitted that a pet project of this magnitude is unsustainable, and therefore unworthy of implementation, in the sense that there is little historical precedence for it. The Library of Congress and the U.S. Code are packed with examples of liberal ideas and programs, which, though well intentioned, are no more responsible than the CLASS Act. The ill fate of this measure may permit a moment of heady optimism among conservatives that their liberal counterparts may be ever so painfully becoming conscious of certain realities, among them A) the fact that there are a far greater number of worthy causes out there than there are federal dollars to spend on them, B) there is a point at which the level of government spending exceeds safe limits, and that C) those two facts taken together pose existential challenges to the credenda of liberal thought.

There are better ways for society to address such economic issues as those that the CLASS Act was intended to deal with, very few of which involve the federal government.   This singular instance of foresight and realism trumping liberal demagoguery should be preserved for use as illustration in the economic battles to come.