Bipartisan Senate Budget Plan Would Repeal CLASS

A bipartisan deficit reduction plan proposed by the so-called “gang of six” Democratic and Republican senators would repeal the Community Living Assistance Services and Supports (CLASS) Act. CLASS, a national, voluntary long-term care insurance program, was included as part of the 2010 health law. The new budget plan, which President Obama called a “very significant step” also proposed significant,  but unspecified cuts in Medicaid as well as other unidentified reductions in non-Medicaid social service programs.

Today, more than 40 percent of all long-term care is funded by Medicaid which is itself under tremendous financial stress. While CLASS is deeply flawed, it is an opportunity to transform long-term care from the means-tested Medicaid program to an insurance-based system. If CLASS is repealed, that opportunity will be lost, and millions of Americans will find themselves with only a shrinking Medicaid benefit to support them in frail old age or if they become disabled at a younger age.

The ultimate fate of the broad budget proposal is unknown. It would reduce the federal deficit by about $3.6 trillion over 10 years and is seen by some, including Obama, as a way to break the debt limit impasse that has divided Washington for months.

CLASS has been a target of both Republican and Democratic deficit hawks since was enacted, largely because they feared it would fail as an insurance program and eventually have to be bailed out by taxpayers. They also objected to budget accounting rules that made it seem as if CLASS was generating about $78 billion in new revenues that would be available to pay for health reform.

The Obama Administration has been struggling to design a CLASS insurance policy that would attract enough consumers to make the program self-sustaining. However, major design problems left many insurance experts skeptical that premiums would ever be affordable enough for broad participation.

While advocacy groups such as Leading Age, which represents some non-profit long-term care providers, immediately urged the CLASS repeal be dropped from the budget bill, I suspect their concerns will fall on deaf ears. CLASS is a tiny piece of a huge fiscal package and I see no one on Capitol Hill willing to defend it aggressively. With Obama and Congress looking for a way out of fiscal gridlock, CLASS will likely be lost in the noise of the bigger budget debate.

If so, CLASS will be remembered as a sadly missed opportunity, and those of us who worry about how the nation will fund long-term care will find ourselves back at square one.

 

Comments

  1. Read my post at gooznews.com . . .

  2. How sad. CLASS never even got off the ground.

    Also at risk: Senior Corps, including the nearly half-million RSVP volunteers who contribute millions of hours of community service. Budgets are also on the table here, even though cuts would impact FREE work provided by these older volunteers.

Trackbacks

  1. […] care for the frail elderly, knows better than anyone. Yet in a blog post yesterday, he all but gave up on preserving CLASS, given the budget cutting fever gripping Washington. Instead of surrendering, he […]

  2. […] Gang of Six plan would kill a long-term care program, writes Howard Gleckman: “A bipartisan deficit reduction plan proposed by the so-called “gang of […]

  3. […] Gang of Six plan would kill a long-term care program, writes Howard Gleckman: “A bipartisan deficit reduction plan proposed by the so-called “gang of […]

  4. […] While repealing CLASS would represent a lost opportunity, the program’s vulnerability highlights the challenges the U.S. faces as it tries to find a way to finance long-term care for its aging population, as well as younger people with disabilities. Currently, the U.S. model is built on the means-tested Medicaid program, which pays for more than 40 percent of all long-term care costs and is itself under tremendous financial pressure. Only about 7 million Americans own private long-term care insurance, which is costly and unattractive to many. CLASS would take a small step toward a public insurance-based system where people would be responsible for financing a share of their own care. But because CLASS is both voluntary and open to nearly all who want to buy, regardless of their medical status, its premiums may be unaffordable for many and the program may not be sustainable. […]

  5. […] CLASS Act: While some early debt limit plans would have killed CLASS outright, the final agreement did not repeal the national long-term care insurance program. […]

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  11. […] plan, however, including its reduction of both the top personal and corporate tax rates and its obliteration of the CLASS […]

  12. […] now on hold. I’m not exactly sure what happened with CLASS. Howard Gleckman notes that CLASS is a sadly missed opportunity. It has powerful opponents in both parties. It also faces serious actuarial questions that remain […]

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