What Happens After CLASS?

My best guess is that Congress will formally repeal the CLASS Act in 2012. Already abandoned by the Obama Administration, CLASS has no champion on Capitol Hill and is likely to fall victim to implacable Republican opposition and a lack of Democratic support. Thanks to technical budget rules, Congress can now kill the national, voluntary long-term care insurance program without adding to the deficit.

The Republican-controlled House probably will vote to repeal CLASS next week. But its formal death warrant is likely to be added to a bigger bill—perhaps the extension of last year’s payroll tax cut or some end-of-the-year budget measure. No matter, CLASS has little chance of surviving.

But what next? Are there opportunities to build on the CLASS debacle?

This morning, a group of long-term care experts discussed their ideas at the annual policy research conference of the National Academy of Social Insurance. Speakers included Anne Montgomery, senior policy advisor for the Senate Aging Committee; Steve Edelstein, national policy director of PHI, which represents direct-care workers; and Harvard Medical School associate professor of health policy David Stevenson, who has written extensively about long-term care delivery and financing.

Anne, who remains optimistic despite her many years on Capitol Hill, suggested some relatively small steps to build on what policymakers learned from CLASS. For instance, the Administration still has some modest funding available for a public information campaign to encourage consumers to think about their long-term care needs.

A few years ago, an earlier campaign called Own Your Future did increase public awareness of this issue, though the degree to which it changed people’s behavior (by, say, encouraging them to buy insurance or increase savings) is unknown.

Anne also suggested that the Administration could try to build interest among employers, who do very little to encourage their workers to plan for future long-term care needs. The absence of likely employer participation turned out to be a big flaw in CLASS.

Finally, Anne said it was important to improve consumer projections for buyers of private long-term care insurance. Her boss, Aging Committee Chairman Herb Kohl (D-WI) has introduced a bill (S 159) that takes some steps in that direction.

Like most financing experts, David believes a universal program is probably the only way to solve the participation and adverse selection problems that plague voluntary long-term care insurance.

As I and others have written, a variety of technical changes, such as tightening enrollment standards could improve a voluntary government program. But they are unlikely to generate enough participation to make optional insurance robust policy alternative to Medicaid, which is how the U.S. pays for nearly half of all paid personal care today.

Steve agreed, and called for a mandatory long-term care benefit under Medicare. That makes sense in many ways, but given the federal deficit and the unwillingness of politicians to raise taxes, it is hardly likely any time soon.

The most provocative remarks, however, came from Dr. Joanne Lynn, who has been an outspoken advocate for a fully integrated health system that incorporates both medical and personal care. Why, she asked, should we have a separate system of long-term care (or long-term care financing) at all? That’s a subject for a lot more thought.

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