Voluntary program in health reform provides affordable, meaningful long-term care coverage for Americans with no mandates or taxpayer dollars
WASHINGTON, March 16, 2011 /PRNewswire-USNewswire/ -- The Affordable Care Act has come under attack from some conservatives who claim it costs too much and requires individuals to purchase insurance. But there is at least one part of health reform that conservatives should embrace.
The Community Living Assistance Services and Supports (CLASS) program will provide affordable, meaningful long-term care coverage for millions of Americans and their families—right in their own homes and communities—at no cost to taxpayers.
"CLASS represents a historic and fiscally responsible opportunity for Americans to plan for their own futures and invest in long-term care coverage that works," said Howard Bedlin, vice president for public policy and advocacy at the National Council on Aging (NCOA). NCOA was instrumental in including CLASS in health reform and is working to ensure its implementation.
CLASS will be discussed in the Energy and Commerce Subcommittee on Health in Washington, D.C. on Thursday, March 17.
Why CLASS Matters
Today, Medicare and employer-based health policies cover little or no long-term care. Medicaid pays for nearly half of all long-term care, but it requires individuals to become and remain poor to receive the help they need. Moreover, two-thirds of Medicaid spending goes to nursing homes and other institutions—instead of home and community-based services.
"CLASS provides coverage for long-term care where people want it most—in their own homes and communities," Bedlin said. To qualify for benefits, individuals must be unable to perform activities of daily living—such as eating, bathing, or dressing. They then receive a flexible cash benefit that they can use to pay for services to keep them independent longer. Unlike private long-term care insurance, no one can be turned down for CLASS coverage because of a pre-existing illness or disability, and the benefits can last a lifetime.
Top 10 Reasons Why Conservatives Should Love CLASS
- CLASS provides flexibility to ensure fiscal solvency. Thanks to an amendment from former Sen. Judd Gregg (R-NH), the plan includes strong provisions to guarantee fiscal solvency for 75 years. Statutory language was purposefully written to provide flexibility in benefit design, eligibility triggers, and work requirements, which will help reduce adverse selection and ensure solvency.
- No federal tax funds will be used to pay benefits. Section 3208(b) states: "No taxpayer funds shall be used for payment of benefits under a CLASS Independent Benefit Plan."
- CLASS has no mandates. It is optional for both employers and consumers.
- CLASS will increase business productivity by reducing caregiver absenteeism and permitting people with disabilities to work. A recent survey found that 74% of caregivers have had to change their job or stop working because of their caregiving responsibilities.
- Americans across party lines strongly support CLASS. According to the most recent Kaiser Family Foundation poll in February, 74% of Americans support the program, with only 20% opposed. Among Independent voters, 75% support and 19% oppose. Among Republicans, 57% support and 36% oppose—a 21-point margin.
- CLASS will likely jumpstart a flat private long-term care insurance market, in which sales have declined and many companies have had to increase premiums on current policyholders. Just as implementation of Medicare led to the creation of a successful Medigap market, implementation of CLASS should lead to a successful market for supplemental "wrap-around" private insurance. When France implemented a proposal similar to CLASS, sales of private plans increased annually by 15%, largely because the public debate increased awareness of long-term care risk.
- CLASS will empower consumers, promote independence and choice, and avoid federal bureaucracy through a flexible cash benefit. CLASS provides a defined contribution, which most conservatives prefer, not a defined benefit. Monthly cash benefits will allow consumers to choose and pay for their own services and spur innovations in service delivery.
- CLASS will reduce the federal budget deficit by $86 billion over the next 10 years, as well as in the following decade, according to a recent estimate from the Congressional Budget Office (CBO). Confusion regarding this estimate reflects a misunderstanding of long-term care insurance products in general, which are designed to build reserves in early years so that benefits can be paid later. Private insurance products accomplish this through a restrictive underwriting process, refusing to sell to those with pre-existing conditions. In contrast, CLASS builds reserves and helps guard against adverse selection through a five-year vesting period. This important design feature is the primary reason behind the CBO estimate.
- CLASS will cut Medicaid costs. According to CBO, federal and state Medicaid costs will be reduced by about $3.5 billion between 2016 and 2019, with larger savings after that can bend the long-term cost curve.
- CLASS promotes personal responsibility and planning. The voluntary option allows individuals to plan ahead if they should need assistance in the future.
The National Council on Aging is a nonprofit service and advocacy organization headquartered in Washington, DC. NCOA is a national voice for older Americans—especially those who are vulnerable and disadvantaged—and the community organizations that serve them. It brings together nonprofit organizations, businesses, and government to develop creative solutions that improve the lives of all older adults. NCOA works with thousands of organizations across the country to help seniors find jobs and benefits, improve their health, live independently, and remain active in their communities. For more information, please visit www.NCOA.org.
SOURCE National Council on Aging