President Obama has signed health reform, including the CLASS Act, into law. Now, his administration needs to turn a law into an insurance product people will buy.
It won’t be easy. No other country has tried to create a voluntary public long-term care insurance program, which is what CLASS is. The challenge will be to design a policy that provides a respectable benefit at an affordable premium. The fear is that only those who need the coverage will buy, driving up premium prices and driving out young and healthy buyers.
CLASS supporters had hoped to make some changes in the law Obama signed this week through the so-called “fixes” bill now being considered by the Senate. But in the end, they chose not to. Instead, the Department of Health and Human Services will try to make some adjustments through regulation and backers are likely to try to quietly slip in some legislative changes in a few months.
Here are some of the key issues administration officials would like to address:
The work requirement: The law makes insurance available to part-time workers. Actuaries fear this would allow many already-disabled people to enroll in CLASS, driving up premiums. As a result, this work standard may be toughened up.
Gaming: Analysts fear some people will game the system by dropping in and out of the program. To prevent this, the administration may limit people’s ability to enroll, drop coverage, and re-enroll.
Marketing: Administration officials believe CLASS will require a major marketing campaign to succeed. They are looking for the money to do this.
Premiums: The new law sets a fixed premium based on your age at enrollment, and that premium generally doesn’t increase. But in an effort to encourage more young people to enroll, some suggest setting a very low initial premium that would rise slowly each year.
One senior HHS official says that, for now, four elements of CLASS seem etched in stone. On one hand, policies must provide cash benefits and coverage must be guaranteed to the broadest possible population. On the other, political realities demand the program be voluntary and based on a system of premium support, rather than mandatory and funded by taxes. Within those constraints, the administration will be challenged to build a functioning insurance program.