Insurance Industry Fighting to Remove Kennedy's LTC Plan From Health Reform

A proposal to establish a new national long-term care insurance program that would offer basic help to the disabled and the elderly is under attack by the insurance industry. Although the proposed program is still included in major health reform bills in both the House and Senate, it is unclear whether it will make it to the final legislation.

"It's got a long way to go to survive," says Brian W. Lindberg, Public Policy Advisor to the National Academy of Elder Law Attorneys.

Proposed by the late Sen. Edward M. Kennedy, the Community Living Assistance Services and Supports (CLASS) plan would set up a voluntary, federal long-term care insurance program. Those who wish to participate would pay a premium of roughly $65 per month, far less than the typical cost of private long-term care insurance. After they had contributed for at least five years, participants would be eligible for a benefit that would vary depending on functional ability but that would average at least $50 a day. While the benefit would be modest compared to the average cost of nursing home care, it could be used instead to pay for a range of services that would help people stay in their homes.

The CLASS plan is part of the Senate Health, Education, Labor and Pensions (HELP) Committee's health care reform bill. This measure will eventually be merged with legislation coming out of the Senate Committee on Finance, chaired by Sen. Max Baucus (D-MT), which is being finalized and does not contain the CLASS plan. On the House side, the House Energy and Commerce Committee approved an amendment by Rep. Frank Pallone (D-NJ) to add a bare-bones version of the CLASS plan to the House health reform legislation, HR 3200, which has not yet been passed by the full House.

The Obama administration has thrown its support behind the CLASS Plan, but that support may not be enough. As The Disability Policy Collaboration reports in its latest Action Alert, the insurance industry has recently launched what the Collaboration calls "a full-scale attack" on the CLASS plan. The American Council of Life Insurers (ACLI), the major trade group representing life insurers (including the leading providers of long-term care insurance), has gone on the offensive against the CLASS plan, which could cut into the sales of its members' private long-term care products. ACLI argues that the CLASS plan's modest benefit will not adequately protect Americans who need nursing home care or 24-hour home health care services.

ACLI is missing the point, counters the Disability Policy Collaboration, which is a partnership of The Arc and United Cerebral Palsy. "By focusing on these extreme ends of long-term care, the industry is mischaracterizing the typical needs of most people with disabilities and older Americans," the Collaboration states in its Alert. "What they most need is some assistance with things like getting up the stairs or getting dressed so that they can stay at home and not enter nursing homes or obtain full-time care before they truly need it. The CLASS plan's cash benefit of about $27,000 per year can go a long way to meeting this need by paying for things like ramps and railings or a few hours a day of a home health worker."

ACLI is also concerned that the CLASS plan will give consumers a false sense of security and further discourage sales of long-term care insurance. (Many consumers already mistakenly believe that Medicare will cover their long-term care needs.) "Simply put, the federal government should not get into the business of providing long-term care insurance. It sets the stage for doing more harm than good to consumers," said ACLI President and CEO Frank Keating.

The Disability Policy Collaboration, is urging individuals to "take on the insurance industry" by calling or faxing their Senators and Representative.

To read the CLASS plan in the HELP committee's bill, click here and scroll down to Subtitle H, Sec. 190 (page 153).

NOTE: On October 20, the Kaiser Family Foundation hosted a briefing to examine the CLASS Act, which it calls a "little-noticed but major proposal to change the way that the U.S. pays for long-term care." The briefing, "The Sleeper in Health Reform: Long-Term Care and The CLASS Act," described how the program would work, how it would be financed and what it could mean for people who require long-term services and supports. An archived Webcast, podcast and other materials related to the 1.5 hour briefing can be found here.