How Is Class Act Different From Enron Fraud?

The Affordable Health Care Act created a new Medicare entitlement – the Class Act.

It sounded like a great idea.  Baby boomers would begin to pay into Class in 2012 and after paying premiums for 5 years would be eligible for benefits to cover long-term home or long-term care facility services — offering seniors peace of mind.

But it turns out to be just another Congressional budget gimmick.  Just like Enron executives,  Congress planned to spend the new Class premiums as soon as they were received – beginning in 2012 – on unrelated, immediate Affordable Health Care expenses.

So, the fact that around 2025, the Class program would be broke and either –

  • tap general tax funds to pay benefits or
  • shut down leaving beneficiaries out in the cold –

was not a surprise to Congress.

Medicare actuary, Richard Foster, told Congress in 2009 –

  • it would take “230 million people paying into the system to keep it solvent”.
  • more than the entire US work force –

Still, Secretary of Health and Human Services, Kathleen Sibelius, promised to use her “administrative discretion” to make good on the Class Act.

Giving any political appointee “administrative discretion” over 1/6 of the US economy and 300M+ lives is scary.  But even with that latitude, the Secretary has asked Congress to delete funding for the administration of the Class Act from the 2012 budget.

Shouldn’t Congress pass a bill to repeal the Class Act if it can’t be implemented?   Logic would dictate the answer be yes – but logic and Congress are not synonyms.

Turns out repealing the Class Act –

  • hurts Democrats by adding $86B to the cost of the Affordable Health Care Act and
  • hurts Republicans by adding $86B to the National Deficit.

The federal prosecution of energy giant Enron was based on exactly the same tactics.

  • Using the assets from one unfunded project as collateral to buy another asset.

Enron executives went to jail for a decade or more as a result –.

What’s the difference between Enron and the Class Act?  None – except the consequences –

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