Obamacare: not a CLASS act

CLASS stands for Community Living Assistance and Support, and is a little known section of both the House and the Senate versions of Obamacare.  It establishes a federal “disability” insurance program. This program is “voluntary” and works like this.

Any worker can decide to enroll, and the premiums for this federal insurance program will be taken out of his or her paycheck.  After five years of paying into the program, one becomes eligible to receive benefits if they become disabled. Disabled is defined as being unable to preform two or more activities of daily living, such as bathing or eating, without assistance.

If you are deemed disabled, then you would receive a minimum of $50 per day in disability payments from the government.  And, according to the House bill, this program must “ensure solvency for 75 years”.  Should you be so inclined, you can find a description of this program at section 2581 (beginning at page 1562) of the House bill.

Of more interest, however, is what the Office of the Actuary for Medicare and Medicaid (OACT) has to say about this program.

First, (at page 11 of the OACT memorandum),

In general, voluntary, unsubsidized and non-underwritten insurance programs such as CLASS face a significant risk of failure. [emphasis supplied]

No surprise there.

And what about the 75 year solvency part?  The OACT finds that it will take only 15 years (until 2025) before the program becomes insolvent (i.e. benefits paid out will exceed premiums paid in).  And, that is giving this program a five year head start. One can join the program in 2010, but the earliest any benefits will have to be paid out is 2015.

Then what?  Either the “voluntary” program becomes “mandatory”, or, the program will need federal subsidies (your tax dollars) to remain viable.

After all, isn’t disability insurance a constitutional right?

4 replies
  1. Dimsdale
    Dimsdale says:

    "Either the “voluntary” program becomes “mandatory”, or, the program will need federal subsidies (your tax dollars) to remain viable."


    Classic Formula Democrat.  Come in with a "voluntary" program, establish it as an entitlement (or a "right"), and thereafter be "forced" to subidize it with tax dollars because they know nothing of basic economics, while "coincidentally" buying the votes of those receiving the entitlements.


    This is one case where past performance is an indicator of future results.

  2. zedgar
    zedgar says:



    The CLASS Act is included for one reason: it develops a pay-as-you-go surplus during the 10-year period even though the American Academy of Actuaries says it is not actuarially sound. Revenues start long before benefits need to be paid. This gimmick produces pay-as-you-go surpluses in the first ten years even though premiums are 23% deficient. This accounts for $72 billion (i.e., 55%) of the $130 billion 10-year Senate Bill surplus! It’s all smoke and mirrors.


Comments are closed.