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A long-term care insurance program in the 2010 U.S. health care reform law has been scrapped because it couldn't be sustained without using taxpayer money, the Obama administration announced on Friday.
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For an affordable premium, the Community Living Assistance Services (CLASS) Act would have guaranteed working adults at least $50 a day if they ever became disabled and needed long-term health care. But because participation was voluntary, Health and Human Services Secretary Kathleen Sebelius concluded that there was no way to keep it solvent.
"We won't be working further to implement the CLASS Act," Kathy Greenlee, the assistant secretary for aging, said in a media conference call on Friday. "We don't see a path forward to be able to do that."
The problem is that few healthy people would choose to pay a premium for care they might never need, and without healthy people paying into the system, there would be no way to keep the premiums affordable for those who did want to participate.
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Voluntary Long-Term Care Insurance Wouldn't Have Worked
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"It's very difficult to have a voluntary insurance program which isn't subject to what the actuaries call adverse selection," Paul Van de Water, a senior fellow at the nonpartisan Center on Budget and Policy Priorities, told the International Business Times. "With the people most likely to need the benefits being the ones who are going to disproportionately sign up, you end up with more bad risks and not enough good risks in the insurance pool."
Health care advocates said the failure of the CLASS Act didn't change the need for a program that would make long-term care more affordable.
"I think it's a loss in that it kicks the can way down the road," Deanna Okrent, a senior health policy associate for the nonpartisan Alliance for Health Reform, told IBTimes. But Sebelius' letter left "a little bit of opening," she said, implying, "Well, we found good information, and hopefully it will help us design something in the future."
The American Health Care Association, whose state affiliates represent more than 10,000 assisted living, nursing and sub-acute care facilities, agreed that reform was necessary and commended the Obama administration for making the effort.
President Obama "recognizes that a majority of seniors will require long-term care services at some point in their lives, and that our federal health care programs cannot afford to have current and future generations failing to prepare for this impending event," Mark Parkinson, the president and CEO of the American Health Care Association, said in a statement on Monday. "But now we are without a plan, and we cannot keep passing the buck."
Republican Leaders: Long-Term Flaw Proves Reform Act's Unsustainability
Republican leaders were quick to cast the abandonment of the CLASS Act as an indication of the unsustainability of "Obamacare" as a whole.
U.S. Rep. Phil Gingrey, a Georgia Republican who sponsored a bill to repeal Obama's health care law, said he felt "justified and vindicated" by the White House's admission that the CLASS Act would not work.
"The bottom line is, as people start to understand this bill, you are going to see more and more of a domino effect," Gingrey told The Washington Post.
