It may be possible to design a modest government-run voluntary long-term care insurance program that is financially viable. It isn’t easy, would probably enroll only about 2 million people, and would take some substantial revisions to the program as imagined by the Community Living Assistance Services & Supports (CLASS)Act. But it might be possible.
That at least is the message buried in the reams of documents released by the Department of Health & Human Services last Friday when it abandoned CLASS. HHS Secretary Kathleeen Sebelius was unwilling to push both the legal and policy envelopes needed to revise CLASS on her own. But an outside actuary as well as HHS staffers who spent months analyzing CLASS came up with a half-dozen different insurance models they felt could have been sustainable.
As many of us have suspected for two years, the basic CLASS plan as outlined in the law would never have worked. The average monthly premium would have ranged from $235-$391 a month, and it is hard to imagine healthy people ever buying at that price, which far exceeds private market premiums.
But–and this has been lost in all the controversy about CLASS–HHS’ outside actuary Bob Yee and his team of agency staffers did find models with the potential to succeed–at least on a limited basis. In their report to Sebelius, the staff acknowledged a high degree of uncertainty about their assumptions because “neither the CLASS program nor any program like it has ever existed before.”
Some of their proposed design changes strayed far from the original CLASS design, which would have made it possible for nearly everyone who worked to enroll, included a premium subsidy for students and others with low incomes, charged a fixed premium, and paid a lifetime benefit for those who were unable to care for theselves. However, all the alternatives retained some critical elements of the basic CLASS plan: They’d be voluntary, benefits would be paid in cash, and there would be no formal underwriting so people could not be rejected for coverage or required to pay higher premiums because of pre-existing conditions.
All of the alternatives, however, made signficant changes in the original CLASS design. Where CLASS allowed anyone who made $1,200-a-year to enroll, the revised plans would have increased that to $12,000–a step that would make it harder for working people with disabilities to participate but significantly reduce premiums for those who could enroll. The revisions would also annually adjust premiums for inflation, a shift that would make insurance much less costly for young people whose participation is critical to a viable program.
Yee and his staff figured revised CLASS insurance could attract about 2 million buyers, although they said it was possible that as many as 14 million would sign up in the right circumstance. Two million are not remotely enough to provide a policy solution to the problem of tens of millions of Americans who will be unable to afford personal assistance in old age or disability. And I’m still convinced that the only real answer is some form of universal insurance. Still, it would have been a start. And it is interesting to learn that it might have been doable, had the Obama Administration been willing to take a chance.
The need for long term care is a catostophic event of a different sort that involves an outcome that very few people want to think about…until it’s too late to insure against it. It will increasingly become so expensive as to be unattainable for most of those who do think ahead. Thus, it is a very real problem for our society that will have to be actuarialized over the entire citizenry to be remotely affordable. Nibbling around the edges of the issue as CLASS was limited to will never prove to be affordable or efficient.
If we can ever pass through this period of believing that government is an incompetent or inefficient way to spread the costs of health care events, long term care will surely be a universal, mandatory coverage element that will be available through the obvious vehicle, Medicare. Sadly, the conversation has been so poluted by poltical rhetoric that this is a huge “IF.”
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