CLASS Act gets boost from CBO cost findings

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Well, the verdict is in, and at first blush, it appears positive. The Congressional Budget office has projected that the CLASS Act, a long-term care legislative proposal, would save $59 billion in direct spending from 2010 to 2019. Included in that estimate is savings of $2.5 billion from the Medicaid program.

To be more specific, the program, which is part of the Affordable Health Choices Act, would produce about $58 billion in revenue over that 10-year period. Also, Medicaid would begin to incur savings in 2016.

It’s hard to dislike a cost estimate that projects savings, but regrettably the picture isn’t all rosy. For one, premiums may have to increase for the program to remain profitable. The CBO said in its report that to be actuarially sound, monthly premiums would have to exceed the $65 dollar amount set by the legislation by $35. And, yes, the program could still become insolvent.

A senior Democratic adviser on the Senate Committee on Health, Education, Labor and Pensions (HELP), which introduced the bill, offered a more positive take on these potential problems. She said that the secretary of the Department of Health and Human Services might find a way to prevent a potential rate hike.

Regarding insolvency, the aide said that the secretary would examine this issue every day and stop the program if she determines it won’t be able to remain solvent.

So how likely is it that Congress would pass such a bill? Certainly, the proposal, which has the support of some 300 groups, including the American Association of Homes and Services for the Aging, has some positive attributes: The program would offer people some protection—at least $50 a day—should they become disabled. It also would be optional with a voluntary opt-out for American workers.

Ultimately, looking at a larger purpose, it would serve as a way to provide some long-term care benefit and relieve some of the heavy lifting from Medicaid, which is already stretched beyond its limits.

The statistics are pretty daunting: An estimated 10 million Americans need long-term services. That number is expected to jump to 26 million by 2050, according to the HELP committee. Also, more than 200 million adults lack any insurance protection against the cost of long-term services and supports. Not only are Americans unaware about long-term care costs, they are generally failing to prepare.

Of course, this plan is intended to work with a wraparound long-term care policy—not serve as a panacea for long-term care costs. The benefit levels would cover only about one-half of the current average cost of long-term care, according to information from the HELP committee.

Of paramount concern are the cost and the possibility it could fail. The government could be asking working Americans to pay $65—or more, it now turns out—to participate in a program that may not be there when they need it.

So the looming question is, is it worth rolling the dice? Of course, we should also ask, what is the alternative?
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McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Emily Mongan.

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