Don’t repeal long-term care program

By Howard Gleckman

McClatchy-Tribune

One of the key battles over the fate of the landmark 2010 health law is being fought over an obscure provision called the Community Living Assistance Services and Supports (CLASS) Act.

CLASS is a national, voluntary long-term care insurance program that aims to help pay for personal care for the frail elderly and younger people with disabilities. Polls suggest the idea is popular among those who know about it. But there are real questions about whether, as designed, it can succeed. And some critics, such as syndicated columnist Charles Krauthammer, rip the program as a “swindle” and a “reckless entitlement.”

On Feb. 7, Health and Human Services Secretary Kathleen Sebelius acknowledged some of the program’s many design flaws and vowed to fix them. The question now is whether Washington should try to repair CLASS or scrap it, as most Republicans and some Democrats prefer.

CLASS should be revamped, not repealed, because it is a modest first step toward turning long-term care from an unsound and inappropriate welfare program into an insurance-based system.

Today, long-term care is largely paid for by an underfunded entitlement program. Medicaid spends fully one-third of its budget — $120 billion annually — on both home-based and nursing facility personal care. This joint federal/state program is by far the nation’s biggest payer of long-term services, funding nearly half of all costs. By contrast, private long-term care insurance pays less than 10 percent.

Medicaid is busting both the federal and state budgets. Even before the added obligations of health reform, the Congressional Budget Office projected the program will absorb 16 percent of all projected federal tax dollars by mid-century. That’s not sustainable.

Cash benefit

As currently designed, CLASS would provide an average minimum benefit of $50 per day for life. And it would distribute this benefit in cash — a feature that would give consumers broad choice in how they structure their care. This flexibility would be a vast improvement over a Medicaid program that too often forces the frail elderly into nursing homes.

But critics are blinded by their green eyeshades. They are offended that, for budget scoring purposes, CLASS counts as a $70 billion revenue-raiser that helps fund the overall 2010 health law. They also worry that it will fail as self-funded insurance and morph into a new entitlement. I share these concerns. However, the responsible answer is not to repeal CLASS, but to repair it. Here’s how:

First, narrow the focus. Today, CLASS attempts to achieve two goals at once. It wants to provide a personal care benefit for working people with disabilities as well as insurance for those worried about needing assistance in old age. It does this by making coverage available to all, regardless of health status, as long as they make a minimum of only about $1,100 in wages per year. This makes it very easy for the disabled to enroll but unfortunately will drive up premiums for everyone else and limit their participation.

CLASS needs to be an insurance program only. Congress should make personal assistance benefits available to working people with disabilities — but not through CLASS.

Second, encourage employers to include this insurance in their employee benefit plans. CLASS will succeed only with robust enrollment, but people must be nudged to participate. Congress should add incentives that will encourage employers to do that marketing.

Independent fund

Finally, Congress should create an independent insurance fund to collect and invest CLASS premiums. This would end the budget gimmickry that troubles deficit hawks. More important, it would assure participants that they are buying real insurance and not just exchanging their premium dollars for government IOUs.

Someday, perhaps, the United States will make the choice that nearly every other major developed nation in the world has already made. And that is to create a national, mandatory, long-term care insurance system funded by some mix of taxes and premiums. As 77 million baby boomers age, we are woefully unprepared both as families and as a society. Medicaid is not the answer. Neither is repealing CLASS.

Howard Gleckman is a resident fellow at The Urban Institute, Washington, D.C., and author of “Caring for Our Parents.” Distributed by McClatchy-Tribune.