| 08 December 2011
The Community Living Assistance Services and Support Act (CLASS Act) established the first national, government run long-term care insurance program to be a consumer financed insurance pool overseen by a government trust. A primary goal of CLASS was to reduce to the role of Medicaid, which currently spends one-third of its entire budget – more than $100 billion a year – on long-term care, and that number is only set to increase as the population ages.
What effect the CLASS Act had on long-term care needs
The CLASS Act provisions would have created a government administrative structure, under which participants would pay a monthly premium and be eligible for modest benefits for their long-term care needs after five years of paying the premiums. This would have been significantly different from any other government program because the Act required that benefits would be paid by premiums collected from voluntary participants and not by the taxpayers.
Although the CLASS Act had laudable goals, commentators from the start have questioned how it would be financed. Not surprisingly, the CLASS Act was cancelled in mid-October and the Obama administration stated it could not be sustained without using taxpayer money as the program had originally intended. Because participation in the program is voluntary, Health and Human Services Secretary Kathleen Sebelius concluded that there was no way to keep it solvent. It was determined that few healthy people would feel the need to pay a premium for care they might never need, and without healthy people paying into the system, there would be no way to keep the premiums affordable for those who did want to participate.
Still a great need for federal programs that would make long-term care more affordable.
The failure of the CLASS Act doesn’t change the need for a federal program that would make long-term care more affordable or create incentives so that people can pay privately for their care. Our population is aging rapidly and we do not have a plan about how to afford to pay for that care. Hopefully, despite the current political climate, there will be a chance for a reasoned discussion of how we can achieve this goal.
