Welcome to The Taxpayer's Tab! This week we're highlighting H.R. 1173 and S. 720, the Fiscal Responsibility and Retirement Security Act of 2011.
The Bill: H.R. 1173/S. 720, Fiscal Responsibility and Retirement Security Act of 2011
Annualized Savings: -$3 million (-$9 million over three years)
Number of Cosponsors: 112 Congressmen and 41 Senators
Last night, the House of Representatives passed H.R. 1173 -- sponsored by Congressman Charles Boustany (R-LA) -- by a vote of 267 to 159. The bill repeals the Community Living Assistance Services and Supports (CLASS) program. The program was part of the Patient Protection and Affordable Care Act that President Obama signed into law in 2010. H.R. 1173 also rescinds $9 million in advance funding for the National Clearing House for Long-Term Care Information, which was also authorized by the health care bill. The Clearing House provides information to help individuals plan their long-term care needs.
While voluntary, the CLASS program was designed so that employers could automatically enroll employees in the program. Premiums were estimated to start at $123 per month. The collection of premium payments was to begin later this year. To qualify for coverage, individuals would have to pay into the system for five years. Benefit payments would cover non-medical services and residence in long-term care facilities. In an effort to ensure the program’s solvency, only individuals who paid into the system would be eligible to receive benefits and coverage could not be transferred to spouses or passed on to family members.
In 2010, the Congressional Budget Office estimated that the CLASS program would collect $72 billion in premiums over its first ten years, while paying benefits for only five. In April of that year, the Center for Medicare and Medicaid Services’ Chief Actuary, Richard Foster, observed that the program would not be financially sustainable.
A provision of the health care bill required the Secretary of Health and Human Services to certify the program’s 75-year solvency before it could go into effect. Late last year, HHS Secretary Kathleen Sebelius announced that the program did not meet that standard. The White House has decided to not move forward on the program but does oppose efforts to repeal the program.
In addition to H.R. 1173, Senator John Thune (R-SD) has introduced the Fiscal Responsibility and Retirement Security Act in the Senate.
According to CBO, the repeal of the CLASS Program would not affect outlays because the program has already been shutdown. Eliminating the long-term clearinghouse would save $9 million over three years.
The cosponsors of H.R. 1173 include two Democrats and 110 Republicans. In the Senate, 41 Republicans support S. 720. One Senator, who recently resigned, was not counted but remains on the record.
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