E-mail this page to a friend!
Senior Citizen Opinions & Analysis
The CLASS Act: A Flawed But Powerful Game-Changer
for Long-Term Care
Health care reform may also provide Americans with
long-term care insurance
Howard Gleckman, Senior Research Associate at the Urban Institute
30, 2009 - Congress may be about to make major changes in the way 10
million frail elderly and adults with disabilities pay for long-term
care services. Buried in both the House-passed health bill and the
Senate Democratic leadership measure, the Community Living Assistance
Services and Supports (CLASS) Act would, for the first time, create a
national long-term care insurance program.
worker would get basic coverage under CLASS, for care either at-home or
in a nursing facility. They’d pay premiums for five years, and they’d
have to need help with at least two activities of daily living (such as
bathing or dressing) before they’d be eligible for benefits. While these
would be modest (perhaps $75 a day), they would be available in cash. It
is hard to overestimate how significant this could be for those
Americans who need assistance and the 40 million family members and
friends who care for them.
Equally important, CLASS could become the model for
a new type of government benefit. Not welfare-like Medicaid. Not another
under-funded entitlement such as Social Security. Rather, if designed
properly, CLASS could become fully-funded insurance. It would give
families the help they need to care for their loved ones.
It could help pay for a wheelchair ramp so mom
could stay at home. It might make it possible for dad to hire his niece
to help him for four or five hours a day, or pay for his visits to an
adult day center.
But it is not easy, and done badly, CLASS could
merely repeat the flaws of so many other well-intended government
programs of the past. Why should people purchase from the government
when they won’t buy from private companies?
And premiums would quickly become unsustainably
high if too many buyers are at high risk for becoming disabled.
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
Basic cash insurance would be a game-changer for
hard-pressed families. It would replace Medicaid with a flexible benefit
that allows families to organize the right care for their loved ones.
Does mom need a wheelchair ramp so she can stay home? Would dad like to
hire your niece to care for him? No problem.
To the degree that national long-term care
insurance can reduce the number of people who go broke and turn to
Medicaid for help, both states and the federal government will also come
away winners. Medicaid spends one-third of its entire budget, or more
than $100 billion a year, on long-term care. The Congressional Budget
Office estimates Medicaid will absorb a stunning one-sixth of all
federal tax revenues by mid-century. And it is putting enormous
financial pressure on states that pay nearly half its costs.
Private long-term care insurance is not doing the
job either. Few buy a product that is costly—typically $3,000 a year for
a 65-year old—complicated, and, frankly, too depressing to think about.
Today, only about seven million people have long-term care insurance,
compared to 250 million who have health insurance. That’s the real
crisis of the uninsured.
But CLASS risks the same market failure as private
insurance. Why should people purchase from the government when they
won’t buy from private companies?
I’d solve this problem by, gasp, making CLASS
insurance mandatory. We effectively do this for auto and homeowner
insurance and few complain. And universal coverage could cost as little
as $50 per month—a small price to pay to lay off some of the risk of
care. Those who want more coverage could buy private insurance, much
like they purchase a Medicare supplement (Medigap) today. France has
universal basic insurance and one-quarter of those 65 and older enhance
this coverage with private policies.
If the insurance is to remain voluntary, as in the
CLASS Act, government needs to combine carrots and sticks to encourage
participation. Employers should be required to offer payroll
withholding, but should also get tax benefits for making premium
contributions. Workers should pay a penalty for delaying enrollment,
just as with Medicare Part D today. But they should also be allowed to
buy coverage with pre-tax dollars.
And whatever else it does, the program needs to pay
for itself. Premiums should be deposited in a quasi-government
corporation that can prudently invest premiums but is walled off from
the grasping hands of Congress.
Pay attention to the CLASS Act. It can not only
provide better long-term care for those who so desperately need this
assistance, it can also become a new way to help those in need in an era
of $1 trillion-plus budget deficits. But only if it is done right.
Howard Gleckman, a resident fellow at the Urban
Institute, is author of "Caring For Our Parents" and a frequent writer
and speaker on long-term care issues.
View all previous columns at Kaiser News Network
information was reprinted from
kaiserhealthnews.org with permission from the Henry J.
Kaiser Family Foundation. You can view the entire Kaiser
Daily Health Policy Report, search the archives and sign up
for email delivery. © Henry J. Kaiser Family Foundation. All
Click to More Senior News on the