Good morning. We are here today to consider H.R. 1173, “The Fiscal Responsibility and Retirement Security Act of 2011.” The bill, authored by our colleague Charles Boustany, repeals the CLASS Act, ending this program that even the Administration has admitted is flawed beyond repair.
The CLASS program has long been a subject of concern. Simply put, the program is unworkable. One Democratic Senator even called CLASS “A Ponzi scheme of the first order, the kind of thing Bernie Madoff would be proud of.” The staff of the Office of the Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services said the CLASS program “[s]eems like a recipe for disaster.”
Since its inception, it was clear that the CLASS program would add tens of billions of dollars to federal deficits despite claims to the contrary. The CLASS program was designed to collect premiums for the first five years without paying any benefits, which of course made it appear as though the program would reduce the deficit. My colleagues on the other side pounced on this opportunity, using this so-called “savings” for their health care overhaul. But, everyone was aware that once the benefits started to be paid, the budget savings would quickly evaporate and the CLASS program would become a drain on the federal budget.
Less than a month after passage, the non-partisan CMS Chief Actuary, Rick Foster, concluded, “there is a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.” Over the next year and a half, the bad news continued. Health and Human Services officials hired private actuarial firms, convened daylong meetings of the federal government’s best actuaries, and solicited input from outside stakeholders. And the conclusion was always the same. The program was not and could not be structured to meet a very important requirement – that it be fiscally sound and sustainable. Not once.
In October 2012, HHS Secretary Sebelius confirmed what we knew all along and formally notified Congress that there was “no viable path forward” for the CLASS program.
In light of the fact that even its supporters in the Administration have failed to find a way to make the CLASS program fiscally sustainable, it must be repealed. Before the holiday season, the Energy and Commerce Committee favorably reported this legislation with a bipartisan vote of 33-17.
However, the tax treatment of the CLASS program falls within the jurisdiction of this Committee. As such, we need to act before sending full repeal of the CLASS program to the floor.
Few will argue with the assertion that long-term care is draining family and state budgets and that something must be done. However, the CLASS program is clearly not the answer and could, in fact, do much more harm than good.
I would like to recognize the author and champion of this legislation, Congressman Boustany, for the purpose of making an opening statement. But before I do, since this is the first meeting of the full committee prior to us departing at the end of December, I want to take a moment to acknowledge both health Subcommittee Chairman Wally Herger and Human Resources Subcommittee Chairman Geoff Davis. Both have announced that they intend to retire at the end of the 2012. Although both of you will be with us for the remainder of this session, I want each of you to know how much we appreciate your time and your friendship throughout the years. And I hope that all of our Members will join me in thanking you for all you have done as Members of Ways and Means.