After spending 19 months trying to figure out how to make the Community Living Assistance Services and Supports (CLASS) Act work, the Obama Administration has abandoned the landmark national long-term care insurance
program that was included in the 2010 health reform law.
But it was easier for the Administration and vocal GOP critics of the program to kill CLASS than to answer the real question: How will the U.S. finance the long-term care needs of 20 million Americans who will need personal assistance within the next few decades? If not CLASS—which would have made it possible for nearly all working people to buy an insurance policy from the government– what?
With CLASS dead, we are left with an utterly failed system. Medicaid, which finances nearly half of all paid long-term care, is itself under immense financial pressure. Few have saved for long-term care needs in old age—half of Americans have less than $55,000 in financial assets, barely enough to pay for 9 months in a nursing home, or 2 years of 4 hours of help each day from a home health aide. And hardly anyone buys private long-term care insurance—only 7 million Americans own policies.
Too often, seniors pay for this care—either at home or in an assisted living or nursing facility—until they go broke. Then, they go on to Medicaid—a safety net program that too often provides the wrong care, in the wrong place, at the
wrong time. Or, they rely on adult children who struggle with the enormous financial, emotional, and physical stress of caregiving. Or, they get no care at all and either end up in the hospital or die alone.
As a society, we are simply unprepared for the crushing financial burden of
long-term care services.
Where do we go from here? Independent analysts say the model most likely to succeed is a system of universal insurance. Every major developed nation on the planet—except for the U.S. and the U.K.—has gone this route. And most programs have been successful. But Congress would not support universal government-run health insurance in 2010 and it won’t support universal long-term care coverage either—at least not any time soon.
Still, Congress could design a system built on private insurance rather than government coverage. Instead of the dreaded mandate, a combination of penalties and rewards might encourage people to buy insurance at a relatively young age.
Such a model already exists. Several do, in fact. Think about the Medicare Part D drug benefit, for instance. Insurance is sold by private companies in a regulated, transparent environment. Consumers can compare policies and prices.
Premiums are relatively inexpensive for people who buy when they are first eligible. But if they wait to purchase, their premiums rise rapidly.
To further encourage participation, Congress could require people who don’t buy insurance to include the value of their home when figuring Medicaid eligibility, an asset that is excluded today.
Also imagine a choice of long-term care insurance options, much like Medicare supplement (Medigap) insurance. You might buy a lifetime cash benefit of $50-a-day that looks like CLASS would have. Or you could buy a policy that paid
$200-a-day for three years. Or even one with a $100,000 deductible.
Advocates for the elderly and disabled, long-term care providers, and insurance companies must sit down and work out a consensus plan. After the CLASS fiasco, it should be clear that if people who care about long-term care issues
don’t act quickly, this issue will end up back in the closet. And that would be a personal and financial disaster for tens of millions of Americans and their families.