Jul 14 2011

Shelby, Thune Question Obamacare Branding Campaign

U.S. Senator Richard Shelby (R-Ala.), Ranking Member of the Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies (Labor/HHS), today was joined by Senator John Thune (R-S.D.), Chairman of the Republican Policy Committee, in writing a letter to Health and Human Services Secretary Kathleen Sebelius regarding the implementation of the Community Living Assistance Services and Supports (CLASS) program. 

The CLASS program is a long-term insurance entitlement authorized by the Affordable Care Act and already acknowledged by the administration to be fiscally unsustainable.  To date, Congress has not appropriated funds for the CLASS program.  However, the Obama administration is moving forward to use taxpayer dollars to fund a promotion campaign for the program. The Shelby/Thune letter questions the appropriateness of advertising a program deemed “immediately insolvent” by Secretary Sebelius and requests an accounting of specifically how much of the American taxpayers’ money will be used to promote a program that has not yet been funded by Congress. 

Senator Shelby made the following statement:

“It is absurd to use taxpayer-funded advertisements to promote a taxpayer-funded entitlement destined for a taxpayer-funded bailout.  The use of taxpayer money for unworkable programs such as this is completely unjustifiable in any circumstance, but particularly in light of our current fiscal difficulties.”

Senator Thune made the following statement:

“Despite the fatal flaws of the CLASS Act, the Obama administration continues to push ahead in implementing this unsustainable entitlement program. The Department of Health and Human Services owes the American taxpayer some honest accounting of where the administration is in the implementation process of the CLASS Act, and why they continue to ignore all of the red flags raised about the massive new entitlement program that is being created. I am greatly concerned about the sustainability of this program and look forward to receiving answers from Secretary Sebelius.”

Forewarnings about the fiscal insolvency of the CLASS program were recognized prior to its authorization as part of the Affordable Care Act and continue as Congress debates the program’s inclusion in the Fiscal Year 2012 Labor/HHS Appropriations bill.

  • “This program is immediately insolvent”Secretary Kathleen Sebelius discussing the program’s fate should only the disabled community enroll in a testimony before Ranking Member Shelby at the FY12 budget hearing in the Health and Human Service budget in March 2011.

 

  • “There is a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.”Richard Foster, CMS Chief Actuary, CMS, “Estimated Financial Effects,” April 22, 2010, page 15.

 

  • “[The CLASS program] is viewed by many experts as financially unsound… Sustaining the system over time will require increasing premiums and reducing benefits to the point that the program is neither appealing to potential customers nor able to accomplish its stated function...To the extent this is not possible, we advise it be repealed.” - The National Commission on Fiscal Responsibility and Reform, December 2010, page 38.

Please find the text of the letter below.

July 14, 2011

The Honorable Kathleen Sebelius
Secretary of Health and Human Services
U.S. Department of Health and Human Services
200 Independence Ave, SW
Washington, D.C. 20201

Dear Secretary Sebelius:

We are writing with great concern regarding the Department of Health and Human Service’s continued implementation of the Community Living Assistance Services and Supports (CLASS) program.  The CLASS program has not been funded by Congress and has been determined to be structurally and actuarially unsound.  Your agency continues to push ahead with implementation of this program that the CMS Chief Actuary Rick Foster has said would be “unworkable” due to adverse selection and has warned that “ignoring 200 years of actuarial principles has consequences.”

We are requesting details on the Request For Quotation (RFQ) 11-223-SOL-00338 to provide assistance to the Administration on Aging for “Promoting Long Term Care Awareness” and RFQ 11-233-SOL-00330 to provide assistance to the Administration Aging for “Developing a Strategic Brand for CLASS.”  We are also requesting an accounting of dollars from Section 1005 of P.L. 111-152, the Health Care and Education Reconciliation Act of 2010, that are being used for the implementation of CLASS Act.

We have a duty to the US taxpayer to be accountable and transparent in allocating scarce federal resources.  The two RFQs will likely spend a considerable amount of taxpayer dollars, and we would like an estimated annual and total funding level for CLASS contracting activity.

Last year, your agency spent $2.78 million to buy airtime for three cable TV ads, some of which featured Andy Griffith, and spent another $404,384 for a media consulting firm to produce the commercials.   These commercials were aimed at informing Americans about the Patient Protection and Affordable Care Act but were deceptive and misleading.  We are concerned that your agency will use federal resources on television ads in an effort to mislead Americans that the CLASS Act is fiscally sound.  

To gain a better understanding of the current status of implementation of this controversial program and how taxpayer dollars are being used, we would like this information by July 29, 2011.  We look forward to your prompt reply.

Sincerely,

John Thune                             Richard Shelby
U.S. Senate                             U.S. Senate