Government-Run Long-Term Care Insurance Program
Makes Its Debut In Health Reform Bill
Older
population needing long-term care is large and growing. An estimated 10
million have enough trouble performing acts of daily living - like
bathing, dressing and eating - that they require assistance
April 5, 2010 One of the key provisions of the
new health reform bill was mostly drowned out by all the shouting and
screaming as the bill moved through the legislative process. This bill
makes the first attempt ever to solve a mushrooming problem facing
millions of senior citizens in the U.S. long-term health care.
SeniorJournal.com did report on this (see link in box for related
stories). Following is a new report by NPR.
This story comes from our partner
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By Julie Rovner, NPR News
It got precious little debate in either the House
or Senate, and President Obama didn't even mention it when he signed the
huge health bill into law. But buried within the new health care
overhaul is the first-ever federal insurance program to help Americans
meet the often crushing costs of long-term care.
The Community Living Assistance Services and
Supports Act, better known as the CLASS Act, was one of the last
legislative efforts of the late Sen. Edward Kennedy (D-MA). He added it
to the health bill last summer as it was moving through the committee he
chaired in the Senate. While some lawmakers questioned whether the
program would, as promised, actually pay for itself, it remained in the
measure to the end.
"Long-term care supports and services have been the
forgotten element of people's health care needs," said Judy Feder, a
senior fellow at the Center for American Progress and professor of
public policy at Georgetown University.
"People who need help with the daily tasks of
living need medical care, and they need these daily supports. They don't
distinguish between the two."
A Growing Population That Needs Care
The population that needs long-term care is large
and growing. Currently, an estimated 10 million Americans have enough
trouble performing so-called acts of daily living things like bathing,
dressing and eating that they require assistance. The vast majority of
that population lives in the community, not in nursing homes or other
institutions.
Yet most people are woefully ill-prepared for the
costs that accompany those needs nonmedical costs that typically are
not covered by Medicare or Medicaid.
That's where the CLASS Act comes in, says Nora
Super, who directs federal government relations for the senior group
AARP. "We find that the vast majority of people need long-term care
assistance as they get older, but they don't save for it," she says. "So
this will help people start saving for it in a very simple way, and help
supplement their saving needs for the future."
While the CLASS Act is a voluntary program, it was
designed to work like Social Security, with premiums to be deducted from
workers' paychecks, unless they opt out. Enrollees become eligible for
benefits after a five-year "vesting" period.
Benefits Will Vary Depending On Disability
The Department of Health and Human Services will
determine the exact amount of premiums and benefits, and benefits will
vary depending on the level of each person's disability. But benefits
will be cash amounts that will be no less than $50 per day.
While that won't pay for a nursing home stay, which
averaged more than $76,000 a year in 2008, "the benefit itself is not
insignificant," says Al Schmitz, a principal and consulting actuary with
the health care consulting firm Milliman. "Somebody getting $1,500 a
month, that can still help with getting some home care, getting
community assistance," he says.
But what does worry Schmitz is the possibility that
the program might not live up to its promise of paying for itself. One
worry is what actuaries like him call adverse selection.
"If the final premiums ... end up being too high, I
think that has the potential to scare away healthy individuals and
really only attract less healthy," he says. That would mean that there
wouldn't be enough healthy people to help spread the risk, and premiums
would get even higher still.
The Act Would Remain Solvent For At Least 75
Years
But Georgetown professor and long-term care expert
Judy Feder says that doesn't worry her.
In making its estimate that the CLASS Act would
remain solvent for at least 75 years, she said, the Congressional Budget
Office used participation rates similar to those for private long-term
care insurance, "which are very low, about 5 percent. And I think that's
conservative. Because with a federally blessed, federally advertised
program, there is a likelihood of higher participation rates from the
get-go, which is what you need to make sure that healthy people are
signing up."
The program is expected to launch next year. The
next step is for the Department of Health and Human Services to
determine the premiums and benefits, and start signing up employers to
offer it.
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An obscure provision of the Senate health bill
attempts to at least crack that barrier