In October, officials at the Health and Human Services department announced plans to suspend the CLASS (Community Living Assistance Services and Supports) Act. CLASS was passed as part of the Affordable Care Act and would have set up a voluntary long-term care insurance program. It came under fire from ACA critics who said it would not save federal dollars. After a lengthy fiscal evaluation, government officials announced that CLASS would not be implemented because it could not be sustained without taxpayer support.
Larry Minnix
Under CLASS, working adults would have paid premiums and received a minimum average daily benefit of $50 should they need long-term care services. The money was available for either nonmedical services in the community or for institutional care.
Long-term care advocates aren’t giving up on the program. Instead, they are urging the Obama administration, which did not fully repeal CLASS, to find a way to salvage the program.
Larry Minnix, president and CEO of LeadingAge, an association of 5,600 not-for-profit organizations focusing on aging and long-term care, offers his views on CLASS and the state of long-term care financing in the United States.
QUESTION: HHS officials have said they don’t plan to repeal CLASS. Could the program come back at a later date in a revised form?
MR. MINNIX: We’re very supportive of the administration’s position not to repeal CLASS. We think what it offers is a construct – now in the law – that forces policy makers and others to have to deal with the issue. A growing number of people are going to need help for basically nonmedical services to be able to stay at home. A large, national insurance pool is a very efficient way to try to help with that need. Every physician’s office is full of people who are coping with multiple chronic conditions who have needs beyond what health insurance will cover. Medicaid is their only option, along with private long-term care insurance. We’re hoping that Congress will keep the CLASS Act as a construct.
QUESTION: What options do older Americans have today to meet their long-term care needs?
MR. MINNIX: Economically, there are three options. You can deplete your assets and go on Medicaid. If you purchased private long-term care insurance earlier, you will get some help from that. But the problem is long-term care insurance is a limited market and it screens for preexisting conditions, so few people have purchased it. Your third option is to pool family resources and pay out of pocket. The services that people need aren’t primarily medical. For example, they need help getting up, bathed, and dressed while their caregiver goes to work. CLASS was designed to cover in part some very practical needs that help families and individuals to be as independent as they can be. The need for these services grows every day.
QUESTION: A recent opinion piece in the New York Times suggested that Medicare should pay for long-term care. Is this is a viable option?
MR. MINNIX: That idea has been kicked around for years. Others have suggested that the Medicaid program be expanded. I don’t think anyone in today’s economic environment thinks that either of those ideas will be acted upon. What CLASS would have done was allow people to insure themselves. We already know they’re spending money on these things. Therefore, if there was a large pool of self-insurance that allowed people to spend the benefit as they needed, that is a much more viable option than another centralized Medicare or Medicaid program.
QUESTION: The CLASS program was voluntary. Is that why it ended up being financial unsustainable and would a mandatory program a better option?
MR. MINNIX: Mandate vs. choice was central in the formation of the CLASS Act by Congress. We did our own study at LeadingAge and looked at the options industrialized countries have chosen to deal with this issue. Germany is probably the closest to our situation. About 15-20 years ago, they had the same problem we do and they tried to punt the problem to their states through their equivalent to Medicaid. That didn’t work because the states couldn’t handle it. German officials finally came up with a mandated long-term care tax. It effectively cut their previous Medicaid-type expenditures for long-term care in half. In our own study, we showed that if a plan like CLASS were in place today and all working people were mandated to participate in it, Medicaid expenditures for long-term care would be about 50%. Politically, everyone says you’ll never get a mandate. But the truth is that a program like CLASS is just plain less expensive than the expansion of existing entitlement programs.