The politics of the CLASS Act, the proposed voluntary government long-term care insurance program, are getting nastier. Critics have taken to calling it a Ponzi scheme, comparing it to Bernie Madoff, and ripping it as a massive new unfunded government spending program. Senator Joe Lieberman (I-Conn) called it “a whole new entitlement program” which it certainly is not.
I’ve raised concerns with CLASS myself. And it is true that it could eventually become a new unfunded entitlement. But it is not now, and the danger that it would become one lies with future congresses, and not with CLASS itself.
The point, though, is that conservative critics of CLASS are missing a huge opportunity. Instead of trashing CLASS, they ought to be trying to fix it.
Properly designed, CLASS can be a be a huge benefit to the frail elderly, adults with disabilities, and their families. Deficit hawks worry that the government would spend hundeds of billions of dollars to provide long-term care if CLASS passes. What they forget is that Medicaid already spends more than $100 billion a year on this care, and as the Baby Boomers age, that amount will explode.
It is far better to replace most of those welfare-like Medicaid benefits with a self-funded insurance program whose reserves are fully insulated from the rest of the budget. Doing that would take some tinkering, but there is nothing in the basic structure of CLASS that precludes such adjustments.
CLASS is a huge opportunity for deficit hawks. It would be a real shame if they blow it.