What we can learn from failures like the CLASS Act

Jared M. Rhoads
Former U.S. Secretary of Labor Robert Reich has shown just what sort of lunacy lies to the President's left.  Reich weighed in on the Obama administration's decision to terminate the Community Living Assistance Services and Support (CLASS) Act, a program championed by the late Sen. Ted Kennedy intended to provide benefits to Americans with long-term illnesses and disabilities.

Due mainly to the program's rich benefits and the requirement that the program had to be self-financing -- achieved by Sen. Judd Gregg of NH with an amendment introduced that now looks very wise -- the program was ultimately deemed fiscally unworkable.  If the program had been implemented, too much would have to be paid out and too little could be collected from enrollees in the form of premiums to make it budget-neutral.

To their credit, the President and his administration saw that CLASS was doomed a long time ago.  HHS Secretary Kathleen Sebelius testified in February 2011 before the Finance Committee that the program was "totally unsustainable" as written and that it "will not start unless we can absolutely be certain that it will be solvent and self-sustaining into the future."

Reich, however, walks away with exactly the wrong lesson. According to Reich, the lesson to be learned from CLASS's failure to launch is not that there is no such thing as a free lunch. Nor is it that we should encourage lawmakers to include more self-limiting legislative language to prevent badly-designed programs from going off the fiscal rails.

For Reich, the fundamental flaw with CLASS was that the program was voluntary.

If only CLASS could have required everyone to sign up -- so that more healthy people would be forced to pay into a program that they may never use -- then all would have been right with the world in Reich's eyes.  This position presumes a duty of self-sacrifice for the collective.  But where in reality does that duty come from? From the desire of policy experts and academics to author major legislation and acquire the admiration of their peers?

Many people work hard to stay healthy. Others have uses for their money that are more productive than sending in a long-term care premium to Washington. Compulsory participation in any health insurance program violates the rights of these individuals, just as today's Medicare and Social Security taxes already do, and just as the individual mandate will when it goes into effect in 2014 unless it is repealed.

There's a better lesson to be learned from this near miss: If you are a policy expert in the throes of designing a new program, and at any point during that process you realize that it cannot work if it is voluntary -- that it must rely on the use of coercive force to "make the numbers work" -- then take that as a signal that what you have concocted is immoral.  Scrap what you have and start over.  You're violating individual rights.

Jared M. Rhoads is the Director of the Center for Objective Health Policy, which advances rational, rights-respecting solutions to health reform. The Center also educates medical students about free markets through its outreach effort, The Lucidicus Project.

Former U.S. Secretary of Labor Robert Reich has shown just what sort of lunacy lies to the President's left.  Reich weighed in on the Obama administration's decision to terminate the Community Living Assistance Services and Support (CLASS) Act, a program championed by the late Sen. Ted Kennedy intended to provide benefits to Americans with long-term illnesses and disabilities.

Due mainly to the program's rich benefits and the requirement that the program had to be self-financing -- achieved by Sen. Judd Gregg of NH with an amendment introduced that now looks very wise -- the program was ultimately deemed fiscally unworkable.  If the program had been implemented, too much would have to be paid out and too little could be collected from enrollees in the form of premiums to make it budget-neutral.

To their credit, the President and his administration saw that CLASS was doomed a long time ago.  HHS Secretary Kathleen Sebelius testified in February 2011 before the Finance Committee that the program was "totally unsustainable" as written and that it "will not start unless we can absolutely be certain that it will be solvent and self-sustaining into the future."

Reich, however, walks away with exactly the wrong lesson. According to Reich, the lesson to be learned from CLASS's failure to launch is not that there is no such thing as a free lunch. Nor is it that we should encourage lawmakers to include more self-limiting legislative language to prevent badly-designed programs from going off the fiscal rails.

For Reich, the fundamental flaw with CLASS was that the program was voluntary.

If only CLASS could have required everyone to sign up -- so that more healthy people would be forced to pay into a program that they may never use -- then all would have been right with the world in Reich's eyes.  This position presumes a duty of self-sacrifice for the collective.  But where in reality does that duty come from? From the desire of policy experts and academics to author major legislation and acquire the admiration of their peers?

Many people work hard to stay healthy. Others have uses for their money that are more productive than sending in a long-term care premium to Washington. Compulsory participation in any health insurance program violates the rights of these individuals, just as today's Medicare and Social Security taxes already do, and just as the individual mandate will when it goes into effect in 2014 unless it is repealed.

There's a better lesson to be learned from this near miss: If you are a policy expert in the throes of designing a new program, and at any point during that process you realize that it cannot work if it is voluntary -- that it must rely on the use of coercive force to "make the numbers work" -- then take that as a signal that what you have concocted is immoral.  Scrap what you have and start over.  You're violating individual rights.

Jared M. Rhoads is the Director of the Center for Objective Health Policy, which advances rational, rights-respecting solutions to health reform. The Center also educates medical students about free markets through its outreach effort, The Lucidicus Project.