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Boustany Opening Statement: H.R. 1173, “The Fiscal Responsibility and Retirement Security Act of 2011”

January 18, 2012

I’m pleased the Ways and Means Committee is considering H.R. 1173, bipartisan legislation to repeal the unsustainable CLASS Act. I introduced this bill in March, 2011 with Congressmen Phil Gingrey and Bill Lipinski and we have gained more than 100 cosponsors.

The bill is simple – it repeals the CLASS Act as the program is fatally flawed, fiscally irresponsible and irreparable. Last year, Secretary Sebelius suspended CLASS after her own attorneys conceded she lacked the legal authority to make CLASS appear more actuarially sound.

I agree with employer groups and taxpayer advocates who have no doubt CLASS will return if Congress fails to strike it from the books.  Legal experts at the Congressional Research Service warn a federal judge could force HHS to revive CLASS when the Secretary misses the October 2012 deadline for designating a final plan.  Citing HHS, the Congressional Budget Office said: “the program cannot be operated without mandatory participation so as to ensure its solvency.”  

CLASS is unsustainable and a new unfunded entitlement we cannot afford. Early in the process, CBO warned it would: “inevitably add to future deficits (on a cash basis) by more than it reduces deficits in the near term, even though the premiums would be set to ensure solvency of the program.”

It’s also a bad deal for Americans who will need long term care, with premiums as high as $391 per month, a “price, which far exceeds private market premiums,” according to the Urban Institute’s Howard Gleckman.  Under CLASS, consumers receive no private contract that guarantees benefits.  They must meet a five year vesting period and forfeit what they contribute into a pay-as-you-go system with no reserve requirements.  

As a physician, I treated hundreds of patients who needed long-term care, including families with Alzheimer’s disease.  American middle class families remain dangerously unprepared for these costs, thinking they have coverage when they do not.  Some people will spend more than $100,000 on this care.  The fictional CLASS daily benefit of $50 per day won’t cover these costs.  Private long-term care insurance offers a better deal and we should make it easier to purchase.

I urge my colleagues on both sides of the aisle to support CLASS repeal (H.R. 1173). Long-term care reform is a bipartisan issue.  Moving forward, we should make it easier for disabled Americans to save for future needs, expand access to affordable private long-term care coverage and better educate Americans on the need for retirement planning.