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.
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.
Voluntary Long-Term Care Insurance Wouldn't Have Worked
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.
Van de Water countered that the CLASS Act was very different from the rest of the health care law.
While it was attempting to deal with a very serious problem, it is quite distinct and separate from the major health coverage provisions of the Affordable Care Act, he said, citing the expansion of Medicaid, the establishment of insurance exchanges, new market regulations, and tax subsidies as elements of the law that won't be affected. There's no tie-in between the decision on CLASS and anything else in the health reform legislation.
Obama, Some Hill Democrats Did Not Want to Include Long-Term Care Originally
In fact, Obama and several Democratic congressional leaders opposed including the CLASS Act in the health care law to begin with, for some of the same reasons Sebelius cited in nixing it on Friday.
It was mainly the late U.S. Sen. Edward Kennedy, D-Mass., who was responsible for its inclusion. Obama, who doubted the program's feasibility from the start, made its implementation contingent on a certification from Sebelius that the CLASS Act could be sustained long-term without taxpayer support, and Sebelius concluded on Friday that it couldn't.
Connie Garner, a former staffer for Kennedy, told The Washington Post that she thought Obama had given up too easily.
I'm very disappointed, said Garner. CLASS is a critical backstop, giving working families a tool to protect themselves from being one illness or injury away from poverty. The president promised to implement this program. We expect him to keep that promise.
But Van de Water, who also supported the plan, said he believed the Obama administration had done all it could to make it work.
I think that they got all of the expert opinion that it was possible to get, and based on all of that, they concluded that it wasn't possible within the bounds set by the law to make the program viable, he told IBTimes. I accept their decision. If they couldn't figure out how to get it done, it is almost certainly not doable.
Van de Water said an ideal solution would be a program modeled on Social Security and Medicare, which working Americans all contribute to through payroll taxes, but that's unlikely to pass Congress anytime soon.
The sustainability of the overall health care reform law is rooted in the individual mandate, which requires people to participate in the system even if they are healthy, but that has proven to be the most controversial aspect of the law, with several states challenging it as an unconstitutional use of federal power.
The prospect of having some sort of a universal program for long-term care coverage is very small, said Van de Water. I think it would be a good idea, but I don't think it's going to happen.