Posts Tagged ‘National long-term care insurance’

A CLASS Act

Tuesday, March 1st, 2011

The Obama administration is fending off critics of the CLASS Act, a voluntary insurance program created by the Patient Protection and Affordable Care Act designed to assist individuals who require long-term care and who want to remain in their communities. Health and Human Services Secretary Kathleen Sebelius is looking into revisions to assure that the program is financially self-sustaining.  The Community Living Assistance Services and Support Act (CLASS Act), which HHS will oversee, is envisioned as providing cash benefits to be used for non-medical expenses, such as paying for a home health aide or a family member to provide care, make modifications to the home and provide special transportation needs.

Opponents to the CLASS Act, such as the Heritage Foundation’s Brian Blase, argue that the program won’t support itself and could become a burden to taxpayers.  Blase says the program is “a Ponzi scheme that transfers money from current payees to current beneficiaries.”  Some Republicans are even calling for the law’s repeal.  Sebelius disagrees, noting that her department is looking at options to make certain that doesn’t happen.  She emphasized the importance of attracting healthy, less-costly people to the program to rein in costs and said that her department is “looking at options for indexing premiums so they would rise along with benefits.”  In addition, she wants to “close loopholes” that would let people drop out of the program and then return without paying a penalty.

According to Howard Gleckman, Senior Research Associate at the Urban Institute, “A key goal of national long-term care insurance is to reduce the role of Medicaid, which today pays for more than 40 percent of all personal care for seniors and others with disabilities. While Medicaid provides a critical safety net, it also often forces the disabled into the wrong care, in the wrong place, at the wrong time.  For instance, most benefits go only to those in nursing homes, even though they are often the last place people want to live.  And to qualify, people normally are allowed to keep only a few thousand dollars of financial assets and earn only a few hundred dollars a month.”

To the extent that national long-term care insurance can cut the number of people who go broke and turn to Medicaid for help, both states and the federal government will also be winners.  Fully a third of Medicaid’s budget, or more than $100 billion a year, is spent on long-term care.  The Congressional Budget Office estimates that Medicaid will absorb a stunning one-sixth of all federal tax revenues by 2050, and is putting financial pressure on states to pay nearly 50 percent of its costs.

So, how does Congress fix the CLASS Act?  First, CLASS needs to be an insurance-only program.  http://www.sacbee.com/2011/02/14/3401075/fix-the-class-act-dont-repeal.html Congress should make personal assistance benefits available to working people with disabilities – but through a separate program.  Second, employers should be encouraged to include this insurance in their employee benefit plans.  CLASS will succeed only with significant enrollment, so Congress should add incentives that will encourage employers to interest their employees in the program.  Finally, Congress should create an independent fund to accumulate and invest CLASS premiums.  This would end the budget gimmickry that troubles deficit hawks.  More important, it would assure participants that they are buying real insurance and not just exchanging their premium dollars for government IOUs.

“Someday, perhaps, the United States will make the choice that nearly every other major developed nation in the world has already made.  And that is to create a national, mandatory, long-term care insurance system funded by some mix of taxes and premiums.  Coverage could be provided by private insurers – just as the Medicare Part D drug benefit is today – or it could be run by the government,” according to Gleckman.  “Given our current anti-government, anti-tax climate, this won’t happen any time soon.  But that doesn’t mean our long-term care needs are going away.  It costs more than $200-a-day, on average, to stay in a nursing home.  Home health aides cost $20 per hour.  And after reaching age 65, more than two out of three of us will need some long-term care before we die.  We are woefully unprepared both as families and as a society for these needs, and the problem will only get worse as 77 million baby boomers age.  Medicaid is not the answer.  Neither is repealing CLASS.”