Major Blow to Obamacare?

This is a rush transcript from "Special Report," October 17, 2011. This copy may not be in its final form and may be updated.


SEN. JOHN CORNYN, R-TX: The administration finally realized when they de cided to pull the plug that this thing was just not workable. It wasn't fiscally sustainable.

LARRY MINNIX, LEADINGAGE, PRESIDENT/CEO: There are paths forward. And it is premature to shut off discussion. So what we are going to be pushing for is keep to discussion alive because we don't have the specific answers yet. And why anyone wants to shut off discussion at this point is beyond me.


BRET BAIER, ANCHOR: Before the break our question of the day asked you "Will the Obama health care law eventually be repealed?" 97 percent of you said yes, roughly three percent said no in our unscientific online poll.

Talking here about part of the Obama health care law called CLASS. It's a new entitlement for the disabled that would have gone in effect. But Health and Human Services Secretary Kathleen Sebelius said it was unworkable and the administration couldn't go forward because it would have exploded federal deficits in the out-years.

Here is what she wrote in a letter, quote, "Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time."

Now, you heard the liberal groups insist the program should not be killed. The White House released a statement today saying "We do not support repeal. Repealing the CLASS act isn't necessary or productive. What we should be doing is working together to address the long-term care challenges we face in this country."

Now, it sounds confusing. Essentially what the White House was responding to was Republican efforts -- were Republican efforts to essentially put into law what Secretary Sebelius was saying in policy, that they couldn't move forward with this because it was too expensive.

We're back with our panel. Mara, critics say that this eliminates roughly $70 billion in what the Obama administration said were savings in the health care law over 10 years. And it shows that the law is unworkable in the big picture.

MARA LIASSON, NATIONAL PUBLIC RADIO: Well, it shows certainly this part of the law certainly was unworkable.

Long-term care is something people really want. As a matter of fact, to keep people in their homes, that is something that a lot of people want as opposed to spending money on all this high-tech end-of-life care. However, it's really hard to make this work. Because, this was voluntary. I guess their analysis showed that only sick people were going to sign up for it and therefore, there weren't going to be enough healthy people to subsidize it.

I think this is a blow to the overall view of the health care act. However, I think the politics of health care are set in stone. I don't think this is going to change anybody's mind. The people who want this to be overturned, who think the mandate is unconstitutional, they certainly over -- out-weigh people who support the law in their intensity. That's the politics of health care going into 2012. The people who want to get rid of it, care a lot more about it than the people who support it.

And we're gonna find out during the course of this election, because both sides asked for a quick opinion from the Supreme Court. They didn't want to wait to rule on the constitutionality of the whole law and the mandate. And it's interesting that the White House came to the conclusion that they wanted a quick decision. They want to be the ones to pick up the pieces if this thing's going to be overturned

BAIER: But yet, in this particular thing, Nina, on this CLASS act, the White House seems to want it both ways, to not actually repeal it by law, but to not implement it by policy.

NINA EASTON, COLUMNIST, FORTUNE MAGAZINE: Yeah, they don't want to repeal it. That would look like a huge blow, which it will be and is to their constituency. I mean this is based -- Mara's right. This is based on the idea that people toward the end of their lives are gonna need to go to nursing care for like nursing care facilities, which are $75,000 a year, or $18,000 for in-home care. That a lot of people need that. Medicare doesn't cover it. And it breaks a lot of people financially. It's hard.

But it's based on the premise, a voluntary premise of younger people saving $200 to $300 a month. Well, they figured out, that most younger people aren't going to do that. And as Kathleen Sebelius even said on Friday, if this collapsed it would hurt all those people who put all that money into it.

LIASSON: It's the right decision.

EASTON: And I also think it brings up -- but it also drives home that people want this stuff, this medical care. And the health care -- Obamacare is sort of premised on affording it for them, ya know, taking care of the cost for them.

BAIER: Right. And Steve, the liberal supporters said they want the president to live up to his promise. He made a promise. They expect him to keep it. But the chief actuary of Medicare has warned that this program would have had to enroll 230 million people to be workable. That is more than the entire American workforce.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: In fact you can't make two plus two equal 12. It just isn't going to work. And that is why this was never going to actually happen.

The reason -- the other reason it was going to fail was because it was designed to fail. I think that everybody knew from the get-go that this wasn't going to work. The structure, the payment structure that Nina described was never actually going to be seen. You weren't going to be able to see it implemented.

And without that, the liberals thought well, the government could come in and pick up the slack and then this becomes, really just becomes another add-on to Medicare. It could be, some people are calling it Medicare part E. Conservatives and others thought, no this is unworkable. And we're never going to be able to finance it that way. So let's not even make the attempt.

But the most important thing to understand about all of this is that this latest study that HHS did that found, that this was unworkable was the last in a series of studies that found this. You had these going back, you had the American Academy of Actuaries coming to a study that said this isn't going to work. You can't make this sustainable. And Foster, the chief Medicare actuary, said this in November of 2009. He did a study that suggested it wasn't going to work.

BAIER: So that's the point, I guess. If this doesn't work and all of this was not presented before the law -- or because the bill passed and became law, Republicans are saying what else doesn't work and is not transparent?

LIASSON: Yes, there is no doubt that this gives fuel to that kind of accusation.

However, the structure of this is not identical to the structure of the basic Obama health care plan with the mandate and with subsidiaries. It's different. But it raises the question -- what else is not going to work out? Look, a lot of this is trial and error. I mean nobody has ever tried to implement something on this scale. And, you know, there will be a lot of things they find out need to be tweaked and changed.

BAIER: That sounded like now-House Minority Leader Nancy Pelosi. We'll find out what is in the bill after it passes.

LIASSON: We'll find out if it works.

BAIER: So $70 billion was part of the sale to some of these votes.

LIASSON: That's right. $70 billion was part of the sale of this is going to reduce the deficit by $70 billion. It turns out that was bit of an accounting trick, although I don't think that's what it was premised on initially, but that is what it turned into being. I think it's a big blow to the president's signature law.

HAYES: In essence, it did its job right. It gave them an argument to make for deficit reduction.

BAIER: That is it for the panel. But stay tuned to see what the 2012 political calendar may look like soon.

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