Nice to see President Obama and Health and Human Services Secretary Kathleen Sebelius beginning to talk about the CLASS Act–the voluntary national long-term care insurance program that is included in the new health law. But unfortunately, even at a town hall yesterday at a senior center, CLASS was little more than an afterthought for the Administration.
Sebelius discussed the new program only in response to a question. Obama was focused on other benefits, such as shrinking the donut hole for the Medicare Part D drug benefit and new preventive care under Medicare. Of course, these are important. And because people must still be working to enroll in CLASS, many seniors who attended the event will not be eligible for the program. Still, the Administration will need to talk far more aggressively about CLASS if the program is to succeed.
As private insurers will tell you, selling long-term care coverage is very hard. Consumers don’t want to think about disability and they are reluctant to pay premiums today–which will reduce their current disposable income– to insure against the possibility of needing personal care in 30 or 40 years.
That’s a big reason why only about 7 million people have private long-term care insurance and why so few policies are being sold these days. Like private insurance, CLASS will be be nothing more than a niche product without an aggressive marketing campaign. And unless millions of people buy, CLASS will fail.
A lack of funding to promote CLASS is a major flaw of the new law. It allows the government to spend only 3 percent of premiums on all administrative costs, including marketing. This is far too little. But it actually overstates the available resources. The key period for promoting any new product is just before it goes on sale. And since no-one will have yet purchased, the government will have no premium income and thus no funding for advertising.
A handful of private foundations and some advocacy groups are quietly discussing ways they can help market CLASS coverage. But the White House has tbe biggest megaphone of all and, I hope the President will use it to encourage people to prepare for their long-term care needs. If not, the government will learn what private insurers already know–only a few people will buy long-term care insurance, no matter how important many of us think it is.