As the healthcare debate continues to unfold, a little-known but important provision in the Democrats’ reform package that would fill a huge gap in our nation’s health insurance system is attracting renewed attention.
This provision—the Community Living Assistance Services and Supports Act, or CLASS Act for short — would create a national long-term care insurance program. It couldn’t come at a better time.
Roughly 10 million Americans are currently in need of long-term services and supports. That number is expected to increase by half over the next 10 years. Yet few Americans have insurance plans that cover such care.
Many people assume that Medicare will take care of any long-term services and supports they may need down the road. Unfortunately, that’s not the case. Medicaid — the government health-insurance program for the poor — will pay for long-term care, but seniors and the disabled would have to impoverish themselves in order to qualify.
The CLASS Act would create a voluntary insurance program that would pay out cash benefits in the event a beneficiary became too disabled to perform normal daily activities, like getting dressed. Those who elected to participate would have premiums deducted from their paycheck.
By providing benefits in cash — an estimated $50 to $75 a day— the CLASS program would ensure that beneficiaries could go on leading productive, independent lives. And unlike some forms of insurance, CLASS benefits would continue for as long as a person’s need persists—whether that’s three months or a lifetime.
It’s important to note that this money is not designed to replace private insurance. CLASS benefits simply provide a financial backstop to protect against disability- or age-induced impoverishment. Beneficiaries would be expected to have supplemental private coverage as well.
Other countries have found that government-sponsored long-term care insurance actually stimulates the purchase of private policies. In France, sales of private “wrap around” policies have jumped 15 percent annually since lawmakers there created a long-term care program. Germany saw a similar jump in private insurance sales after it created its long-term care plan.
If these countries’ experiences are any indication, the CLASS program would serve as a low-cost “foothold” that makes private coverage more affordable for those who might typically be scared away from long-term care policies by high prices.
Critics of the CLASS program claim that it will add to the federal deficit.
But that’s not the case. Because people would pay premiums to participate, the CLASS Act’s benefits would be funded exclusively by beneficiaries’premiums and earned interest, not general tax dollars. The reform package also mandates that the program remain solvent for 75 years. The Congressional Budget Office (CBO) and other experts have found that the CLASS plan will meet this requirement.
In fact, the CBO estimates that the program would actually lead to about $72 billion in net deficit reduction over the next 10 years.
The CLASS provision would help millions of Americans afford vital care.
Establishing this voluntary and fiscally responsible program now, under the healthcare reform umbrella, will ensure that America’s most vulnerable get the care they need now and into the future.
Minnix is President and CEO of the American Association of Homes and Services for the Aging.