WASHINGTON, D.C., Feb 1, 2012 — The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) today praised the U.S. House of Representatives for passing H.R. 1173, the “Fiscal Responsibility and Retirement Security Act of 2011,” by Rep. Charles Boustany (R- La.). H.R. 1173 would repeal the CLASS Act, a government run voluntary long-term care insurance program that was originally passed as part of the Patient Protection and Affordable Care Act (PPACA).
“The Big ‘I’ is grateful for House passage of this important bill and would like to thank Rep. Boustany for sponsoring this legislation,” says Robert Rusbuldt, Big “I” president and CEO. “This massive new entitlement program was doomed from the start and should be taken off the books now that the Obama Administration has also deemed it unworkable.”
The CLASS Act was due to begin enrollment in October 2012, however, the Obama Administration halted its implementation in October 2011 after determining they could not meet the statutory requirement that the program be actuarially sound over 75 years. The parameters of the program were such that only those who were already in need of benefits would likely be attracted to apply, causing premiums to rise to the point where healthy individuals would be discouraged from enrolling thereby creating the classic adverse selection scenario. This would lead to the program’s finances spiraling out of control and, inevitably, to insolvency.
Despite the halt in implementation, the statute authorizing the CLASS program remains on the books and could potentially be used in a future attempt to restart this misguided program. The only way to prevent this is a legislative repeal of the statute by Congress, which is the purpose of H.R. 1173.
“Today’s action by the House was an important step toward full repeal of this ill-advised program and we urge the Senate to follow suit,” says Charles Symington, Big “I” senior vice president of government affairs. “From its inception, this program set a dangerous precedent for massive government intervention in the private market. Now that the Administration has been forced to abandon it, the good public policy course of action is to repeal this program so it cannot be revived at some later time.”
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.