The Congressional Budget Office has estimated that a legislative proposal for a disability insurance program would save $59 billion between 2010 and 2019. Also, if implemented, this program would lead to savings of $2.5 billion for the Medicaid program over that period, the public analysis agency said late last week.  

The program, which is known as the Community Living Assistance Services and Supports (CLASS) Act, would allow workers to pay a monthly average of $65 into an "Independence Fund." The fund, in turn, would offer a payout of $50 a day for those who no longer can perform at least two activities of daily living. People would have to be vested in the program for five years to receive the cash benefit. The program is a part of the Affordable Health Choices Act, a bill proposed by the Senate Committee for Health, Education, Labor and Pensions (HELP). A preliminary CBO estimate has placed the cost of the universal healthcare portion of this bill at $1 trillion over 10 years.  

In response to the scoring, the American Association of Homes and Services for the Aging, which helped craft the legislation, Friday released the following statement:  

"The scoring issued today by the Congressional Budget Office on Section 191 of the Affordable Health Choices Act proves that our country can create a national insurance trust for long-term services and supports that is affordable for average Americans and does not drain government resources."

In a background call about the scoring held Friday, a senior democratic adviser on the HELP committee noted that the program is intended to work in tandem with long-term care insurance products, and not act as a replacement for them.

"This is not about competing with the industry. It's about gloving with them," she said.

The 10-year cost projection by the CBO is based on the knowledge that, while premium collections would begin in 2011, no one would be receiving benefits until 2016. Also, it is based on an assumption that premiums are set on average at $65 a month. But to be actuarially sound, the CBO said that premiums would have to exceed the average dollar amount of $65 set by the legislation by $35 to $45.

The adviser on the call noted that the legislation allows for the secretary of the Department of Health and Human Services to change the premium and also to project solvency for the program based on the previous year, and over a two-year, 50-year, and 75-year outlook. If she determines that it would not be solvent, she could stop enrollment. Two populations would only have to pay $5 premiums: those whose incomes do not exceed the poverty line, and students.   

In response to a caller who asked how Medicaid could save $2.5 billion over 10 years, the adviser said she guessed it would be because the program would be the payer of first resort to Medicaid. Those who are impoverished and on Medicaid would pay into the program and thus receive cash from the disability program first.