A.M. Best Company, Inc. reports:
“The U.S. House Energy and Commerce Subcommittee on Health took aim at a government-run long-term care program included in the Affordable Care Act, with members questioning whether it should — or can — even get off the ground.
Chairman Joe Pitts, R-Pa., criticized a U.S. Department of Health and Human Services budget request for $120 million to launch the Community Living Assistance Services and Support Act. He noted HHS Secretary Kathleen Sebelius said the act, as written, is not fiscally sustainable in a February appearance before the Senate Finance Committee. Rep. Phil Gingrey, R-Ga., called it a “new entitlement nightmare” that would require subsidies in the future.
CLASS is a national, voluntary insurance program slated to become available in late 2012. It would provide an average benefit of no less than $50 per day for long-term care services, such as at-home care (BestWire, Oct. 12, 2010). Premiums have yet to be finalized, but studies from the Congressional Research Service and the Congressional Budget Office have estimated monthly payments of $240 (for the $50/day level) and $123 (for a $75/day level), respectively. Payments could not be disbursed until a participant has been enrolled in the program for five years.
Republican lawmakers have sought to repeal CLASS, either separately or as part of overturning the entire health reform law (BestWire, Oct. 12, 2010). Democrats questioned the purpose of the entire hearing, saying it seemed to be about discrediting the program, not seeking how to replace or improve it, as Sebelius has said is necessary.
“I don’t hear any alternatives coming from the other side,” said Rep. Frank Pallone, D-N.J., the ranking Democrat on the panel. “We’re faced with an impending crisis in long-term care.”
The nonpartisan CBO estimated the CLASS program will save $70 billion over a 10-year period, including $2 billion in savings to Medicaid from those with long-term care needs not having to rely on the program. The CBO also forecast the program costs to increase in subsequent years, as the initial 10-year period includes the five-year startup. The office assumed a 3.5% participation rate in the program, compared with a 4% participation rate in the employer-sponsored private LTC insurance market.
While CLASS program is required to be actuarially sound over a 75-year period without taxpayer support, that will be difficult to achieve, said Allen J. Schmitz, a consulting actuary for Milliman testifying on behalf of the American Academy of Actuaries. With guaranteed issue and a waiting period that is too short, the voluntary program is at great risk for adverse selection, he said.
“Repeal is the only logical alternative. It is far better to repeal a defective program than to let it repeal itself through fiscal failure,” said Joseph Antos, a health care and retirement scholar with the American Enterprise Institute.
Rep. Anthony Weiner blasted his GOP colleagues for criticizing the program as unworkable in part because of its voluntary nature. He noted that then-Sen. Judd Gregg, R-N.H., proposed an amendment ensuring the program remain voluntary that won unanimous support.
“There’s an expression, ‘It takes a good man to build a barn but any jackass can kick one down,'” Weiner said. “My friends on the other side of the aisle are kicking down their own barn.”
CLASS will not start unless its solvency is assured, said Kathy Greenlee, the assistant HHS secretary who oversees the Administration on Aging. “The premiums have to cover the benefits,” she said.”