Sometimes a quick death is the best way. That is true of the Obama administration’s decision, announced Friday, to kill the Community Living Assistance Services and Supports Act, better known as the CLASS Act. The program, adopted as part of the larger health-reform bill, would have created a voluntary long-term care insurance program run by the federal government. Those who participated and paid in for at least five years would have become entitled to a cash benefit of at least $50 a day to pay for non-medical services they required to stay at home rather than enter a nursing home.
The problem, as numerous experts warned at the time, was whether the program could be run, as the law required, in a way that made it financially solvent for at least 75 years. The difficulty with the CLASS Act was ensuring that premiums could be set low enough to attract widespread participation but high enough to pay the promised benefits. The risk was that the program would attract the sickest participants, who thought they might need its protections, and thereby drive premium prices ever higher in a spiral of dysfunction.
On Friday, Health and Human Services Secretary Kathleen Sebelius announced that the department had decided to pull the plug on CLASS. ”I do not see a viable path forward for CLASS implementation at this time,” she wrote in a letter to congressional leaders. This is the right conclusion. Although Republicans were quick to leap on the move as an illustration of the unworkable nature of the health-care law, that is an unfair dig. The CLASS program was conceived as a separate, standalone measure.
Only 2.8 percent of Americans have private long-term care coverage. By 2020, an estimated 15 million will need some form of long-term care.Long-term care already accounts for about one-third of Medicaid spending. The CLASS Act may be gone, but the problem remains.