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Sunday, October 09, 2011

Not a CLASS Act

Alex Tabarrok summarizes the current thinking on the Obama medical plan’s Community Living Assistance Services and Support program.

http://marginalrevolution.com/marginalrevolution/2011/10/not-a-class-act.html

 

“So we have phantom savings from a zombie program and many people knew at the time that the program was a recipe for disaster.”

 

It’s basically a cynical sham in the plan, put in there to result in “savings”. The sham continues. The government hasn’t implemented the plan, perhaps because there aren’t that many crazy actuaries.  But the phantom savings are still there:

 

“It’s a long-term care plan the Obama administration has put on hold, fearing it could go bust if actually implemented. Yet while the program exists on paper, monthly premiums the government may never collect count as reducing federal deficits.”

 

It’s at this point that it’s easy to have some sympathy with the point of view of those who want no new taxes period, and who are suspicious of “tax reform” and “deficit reduction” as illusions filled with rotten Easter eggs.

 

The Obama medical plan is a fine example of this. In the end, it doesn’t cover everybody. It probably won’t lower costs. And it requires a huge tax (in the form of forced insurance) on the young and healthy in order to subsidize rates for the less healthy.