Piece by piece, will Obama's health-care reform law be dismantled?

The landmark health-care reform law – President Obama's signature domestic triumph – has suffered its first major body blow, dealt not by Republican lawmakers intent on dismantling "Obamacare" but by the administration's own Health and Human Services (HHS) Department.

The setback came in mid-October, and it means that a piece of the 2010 Affordable Care Act – a new program intended to help seniors and disabled people afford at-home care – will not be set up after all. The problem? HHS could not see how to make that program, called CLASS, "actuarially sound" for 75 years, as the law required.

The Obama administration's acknowledgment that the CLASS numbers don't add up is only fueling the GOP narrative that the entire health-care law is a boondoggle and won't provide the cost savings to government that Democrats had promised. Indeed, the CLASS (Community Living Assistance Services and Supports) Act was supposed to shrink US deficits by $72.2 billion over 10 years – fully half the $140 billion in deficit reduction the Obama administration claimed for the overall health-care reform law at time of passage.

"Had the whole bill been subject to the accounting and actuarial review that the CLASS Act was, it would not have survived either," says former Sen. Judd Gregg (R) of New Hampshire, who slipped in the pesky actuarial requirement as the CLASS legislation was taking shape.

The demise of CLASS, say critics, signals the beginning of the end of Mr. Obama's health-care reform law. Many Republicans have pledged to starve it of funding, and the US Supreme Court is slated to discuss in a Nov. 10 closed-door conference whether to hear the various legal challenges to it. Moreover, the law's bid to expand Medicaid, a public health program for the poor, is in jeopardy as states restrict access and make cuts to try to control rising costs.

Supporters of Obama's health-care reforms acknowledge that the collapse of the long-term care provision could drive support for a broader repeal of the law. But they are playing down that concern.

"Clearly, the CLASS Act was the premier attempt in the Affordable Care Act to address long-term care," says Ron Pollack of Families USA, a national organization for health-care consumers. "That said, this program was really separate from all of the remaining portions of the act and should have no impact at all in terms of their implementation."

Now that the CLASS program will not materialize, where does that leave the health-care consumer?

At least 2 in 3 seniors will need help with daily activities at some point in their remaining years, estimates HHS. But fewer than 10 percent of those age 50 or older have private insurance to help pay for it, according to the Congressional Research Service. Options include a nursing home at a median annual cost in 2010 of $75,000, assisted living at $37,500, or a home-care attendant at $19 an hour to help with basics such as eating and getting into bed. But Medicare covers only limited long-term care services, meaning individuals pay for them mostly out of pocket. Medicaid does cover such services, but beneficiaries must have nearly depleted all resources before they are eligible.

"There needs to be a mechanism by which people can insure themselves against being bankrupted by medical expenses later in their life," says Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities.

The CLASS program would have allowed people to buy insurance to cover in-home care; after paying into it for five years, they would be eligible for, say, a $50-a-day benefit to subsidize an attendant's salary, so they could afford to live at home rather than in a more expensive institutional setting.

But HHS documents reviewed by a House and Senate GOP CLASS Act working group showed that HHS officials were concerned as early as May 2009 that CLASS could not be sustained without billions in taxpayer subsidies by the third decade, when claims would be spiking.

Is this the end of the issue? Not likely. Republicans and some business groups say it's not enough that HHS says it is scrapping plans for the CLASS program. They want Congress to repeal it.

"CLASS is not gone – not yet," said Rep. Denny Rehberg (R) of Montana, a member of the CLASS Act working group, at an Oct. 26 hearing. "The secretary can claim she has the authority to, in effect, rewrite it."

The US Chamber of Commerce, which backed the overall health-care reform law, is also calling on law-makers to repeal CLASS, saying it will never benefit taxpayers and could yet be revived by regulators. Democrats, though, still want to find a way to make the CLASS Act work.

"Cheering the suspension of CLASS does nothing for the working families in my district who are already under the enormous stress that comes when a parent falls seriously ill and who have no way of paying for the around-the-clock care their loved one needs," said Rep. Ted Deutch (D) of Florida, at the Oct. 26 hearing.

According to updated estimates from the Congressional Budget Office, the Affordable Care Act will cut federal deficits by $127 billion over 10 years, even now that CLASS is excluded.