Health and Human Services (HHS) Secretary Kathleen Sebelius appeared before a Senate Appropriations subcommittee yesterday. She discussed the operation of the HHS, and particularly the impact of ObamaCare, the usefulness of the new programs, and their impact on the federal budget.
The Senate hearing followed predictable lines of disagreement from Republicans and Democrats over proper health care policy. The larger issue of the long-term cost of health care and the massive current budget deficit obviously dominated the discourse.
One of the provisions of ObamaCare has been mandatory spending, including $4.2 billion for fiscal year 2012. This is on top of the nearly 10% increase in the HHS budget request. The ranking member, Sen. Richard Shelby (R.-Ala.) said in his testimonial, “This is $4.2 billion that this subcommittee cannot reduce or rescind. It is simply more spending for another entitlement program.”
The tattered condition of American federal and state finances makes reductions in cost necessary, which Sebelius lamented but conceded. Brought to the forum were some overlooked, but perhaps understated, issues created by the new health care law. One flaw that has been exposed after the first year of ObamaCare is the HHS-run Community Living Assistance Services and Support (CLASS) Act, which has known funding and effectiveness problems.
The CLASS program, which was originally part of ObamaCare, was designed to care for people who are disabled or elderly. The problem is that the program has no definite line of funding, and no guarantee of revenue. CLASS was designed to support the elderly and infirm as well as healthy people looking for a low-cost health care alternative. Unfortunately, the number of disabled people in the program will push up premiums for the healthy, and the prohibitive cost will drive away those people who are needed to fund the program.
Taxpayers are ultimately on the hook if CLASS turns out to be a failure. The money for the program will come from the general fund if it proves to be financially unsound. Shelby said, “The Congressional Budget Office predicts the CLASS Act will ‘add to budget deficits … by amounts on the order of tens of billions of dollars.’”
Shelby also followed up by saying that the CLASS program has not only requested $120 million in funds, but has also asked for an additional $93.5 million in order to promote the program. Sebelius called this an “Outreach and enrollment feature … that will make the program sustainable in the future.”
So essentially massive amounts of taxpayer money must be used to support the program or it will waste massive amounts of taxpayer money.
Sebelius followed up by saying, “We would not promote a program that could not be sustained, and I am prohibited by law from doing that.”
While a single failed program would not necessarily make ObamaCare a catastrophe, many failed programs would.
Sen. Ron Johnson (R.-Wis.) also mentioned the potential for employers to dump their employee insurance programs en masse, accepting the marginal penalty for doing so to avoid buying the insurance. Those people would most likely end up in an exchange program that requires heavy subsidies. The difference in estimates was enormous. Sebelius thought the number would be about 3 million and Johnson thought it would end up over 30 million people. Both claimed to be using credible experts.
Obviously the complexity and length of the ObamaCare law make it difficult to diagnose and scrutinize as a whole. Smaller programs that looked good or adequate initially may end up being budgetary black holes in the near or long-term future. Even after one year in effect, the impact of ObamaCare is still nowhere near being settled.