Our guest bloggers are Judy Feder, Urban Institute Fellow and Professor and former Dean, Georgetown Public Policy Institute, Harriet Komisar, Research Professor, Georgetown Public Policy Institute, and Paul Van de Water, Senior Fellow, Center for Budget and Policy PrioritiesWith most of the focus on the Affordable Care Act’s impact on health insurance coverage, little attention has been paid to one of its more remarkable initiatives: launch of a modest, but significant, public insurance initiative to protect people who need long-term services and supports. Despite its value and its fiscally responsible design, the so-called Gang of Six has put CLASS (Community Living Assistance Services and Supports Act) on the chopping block. Not only would repeal of CLASS forgo much needed help for people who become disabled; it wouldn’t reduce the budget deficit.
On the help side, CLASS addresses a huge hole in our social safety net: neither private insurance nor Medicare protects people against the risk of needing extensive and long-term help with fundamental tasks of daily living like eating, bathing or getting dressed. Needing that help is just the kind of catastrophic and unpredictable event for which we need insurance protection. Today, about four in 10 people who need long-term care are under the age of 65. Even among people now turning age 65, the risk is unpredictable; three in 10 will likely die without needing any long-term care, but one in five will require services for five years or more. At all ages, impairment is hard to predict or save for. And, if that impairment arises, the costs of care can be catastrophic: over $75,000 per year, on average, for a nursing home, and close to $20 per hour for care at home. With costs so high and no insurance protection, it’s no surprise that, today, so many people who need long-term care get inadequate help or exhaust all their resources and turn to Medicaid for support.
Although the CLASS program doesn’t address this problem today, it makes it possible for working aged adults to start paying now in case they need help in the future. Under the ACA, people can pay premiums while they’re working and — if they contribute for five or more years (and continue to contribute when they retire) — can collect a benefit if an illness or injury impairs their ability to perform basic tasks. The benefit will be meaningful but limited — an average of at least $50 per day that recipients can use to pay for home-based or institutional services, as they see fit. The benefit is quite basic, providing a core of protection that — along with family care, personal savings or private insurance — can help families cope without becoming impoverished.
On the deficit side, CLASS actually helps the budget in the coming decade because CLASS will collect premiums well before it will be obligated to pay benefits. Over the long term, the Secretary of Health and Human Services is required to design benefits and set premiums to assure that the program covers its costs — a standard CBO judged that CLASS can satisfy over the next 75 years.
Certain provisions of CLASS will make its implementation a challenge — in particular, getting lots of healthy people to participate and spread the risk of needing care. The law gives the HHS secretary flexibility to meet that challenge, however, and Secretary Kathleen Sebelius has indicated she’s using that flexibility to launch CLASS successfully. The secretary has made a firm commitment: “The program will not start unless we can absolutely be certain that it will be solvent and self-sustaining into the future.”
Given CLASS’ clear value and its fiscal responsibility, why would anyone want to nip it in the bud? The right action is to make CLASS a success.