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Take the CLASS Act off the chopping block

The CLASS Act, a program for disabled and elderly people included in the 2010 Affordable Care Act, is facing Republican scrutiny

By Guest blogger / March 25, 2011

A care-provider speaks to an elderly woman in this file photo. The Community Living Services and Supports (CLASS) Act would provide a voluntary long-term care insurance program for the elderly and disabled. It's a flawed program, writes guest blogger Howard Gleckman, but is it still salvageable?

Alexander Bernhard/CHROMORANGE/picture-alliance/Newscom/File

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The Community Living Services and Supports (CLASS) Act is an extraordinary case study in both budget and health care politics, and in the toxic political environment in which those of us in Washington live. And it puts a critical question into stark focus: Exactly how do we, as a society, want to provide for the care of people with disabilities or those in frail old age.

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CLASS is a national, voluntary long-term care insurance program that was buried deep within the 2010 Affordable Care Act. The big idea behind CLASS was to take a small step towards turning long-term care services and supports from a program funded largely by Medicaid into a self-funded insurance system. Unfortunately, this extremely important reform was very poorly designed.

At the time CLASS passed, few paid much attention. But it has now become a prime target for those in Congress aiming to repeal “Obamacare.” The other day, Representative Phil Gingrey (R-GA) introduced legislation to abolish CLASS, calling it, “A Bernie Madoff- fraudulent investment scheme…run by the Secretary of the Department of Health and Human Services.”

Overheated rhetoric aside, critics have two substantive objections to CLASS. They are offended that, under the conventions of budget accounting, CLASS premiums are counted as revenues that “pay for” health reform. And they fear that if the program fails as self-funded insurance, it eventually will be bailed out with general tax revenues.

HHS Secretary Kathleen Sebelius acknowledges the program’s flaws. And she is claiming broad authority to attempt to fix an unworkable design. Unfortunately, she is in a race against time. The question is: Can she fix CLASS before Congress kills it?

CLASS’ fundamental flaw is that it attempts to accomplish two incompatible goals with a single program. It creates a new benefit for working people with disabilities and a voluntary insurance program for healthy people looking to hedge against the risk of needing long-term care (either at home or in a nursing facility) sometime in the future. The cost of serving disabled workers will push premiums to unacceptably high levels for those looking to buy insurance. And they’ll probably decline to purchase, dooming the program to failure.

Congress could fix CLASS by following the lead of nearly every other developed country in the world and turning it into universal insurance. A mandated program could make basic long-term care coverage available to all for an average monthly premium of only about $40, according to private consultants Avalere Health. And it could cut Medicaid long-term care costs in half, by about $50 billion. However, in today’s anti-government political environment, such a step is, shall we say, unlikely.