Wednesday, October 27, 2010

(Low) CLASS Act

One of the stated reasons for John Hancock's recent rate hike on some of its Long Term Care (LTCi) business was its large book of government-employee business. No surprise, but apparently gummint workers generated far more claims than anticipated.

So what, you ask?

So this: we've mentioned the so-called CLASS Act (part of ObamaCare©) before, but missed an important point. As Avik Roy points out:

'Another point in the report that deserves further attention is the Ponzi scheme known as the CLASS Act ... CBO determined that the “CLASS program could be subject to considerable financial risk in the future if it were unable to attract a sufficiently healthy group of enrollees.'

And how likely is that? The Congressional Budget Office (CBO) thinks it's not only likely, but a near-certainty:

'Because the law requires the CLASS program to enroll all eligible individuals who apply, CBO said it is “likely that some enrollees would be people who were unable to obtain coverage in the private market because of their poor health status.'

Guaranteed issue? Attracting unhealthy folks? Causing substantial premium shortfalls?

Where have we heard that before?