The Obama administration has suspended implementation of the CLASS Act, a proposed national long-term care insurance program that was part of the health reform law.
"[D]espite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time," Health and Human Services Secretary Kathleen Sebelius wrote in a letter to congressional leaders.
Although it has halted implementation of the CLASS Act, the White House said that it is opposed to efforts to repeal the law creating the program and might veto Republican efforts to do so. According to The Hill, an administration official called advocates of the program "to reassure them that Obama is still committed to making the program work. That official also told advocates that widespread media reports on the program's demise were wrong, leaving advocates scratching their heads."
The Community Living Assistance Services and Supports (CLASS) Act, Sen. Edward M. Kennedy's final legislative legacy, would have created a modest, voluntary insurance program aimed at helping to keep the elderly and disabled out of nursing homes and off the Medicaid rolls.
Americans who wished to be in the program would have paid a monthly premium for five years, after which they would have been vested and eligible to receive benefits averaging between $50 and $75 a day to pay for a range of long-term care services that would have helped them stay in their homes, or the money could have been used to defray the cost of nursing home care.
But the proposal came under intense criticism from Republicans and some Democrats, who charged that it would be financially unsustainable. The program's critics contended that because it would be voluntary, only those with expensive health problems would sign up for it. If too few younger, healthier workers participated, the resulting "adverse selection" would mean that the benefits would be too meager or the premiums too high for the program to work.
The CLASS program's chief actuary, Bob Yee, had concluded that it would be difficult, but not impossible, to make CLASS self-supporting. Apparently, the Administration was not convinced or did not want to assume the political risks involved in continuing to move the program forward. The health reform law required Secretary Sebelius had to certify that the program would be financially sound.
According to an administration analysis of CLASS shared with Congress on October 14, under one scenario a basic CLASS plan with a $50-a-day benefit could cost $235 to $391 month, which could have been cost-prohibitive for many consumers.
But at a health care forum on October 17, Yee said, "I feel pretty comfortable there are ideas out there that could make it work . . . I don't know why they're backing away."
The CLASS Act is the first big part of the health overhaul to be killed and there was speculation that its demise would embolden the law's critics to go after other sections of the law.
For Secretary Sebelius's Huffington Post blog on the CLASS Act decision, click here.
For an article by Urban Institute fellow Howard Gleckman on where we go from here, click here.Article Last Modified: 10/19/2011