Obama Administration Ends Long-Term Health Care Program: What Does it Mean?

Sec. Kathleen Sebelius
U.S. Secretary of Health and Human Services Kathleen Sebelius speaks to reporters following her meeting with health insurance company executives and related industry officials at the White House in Washington, March 4, 2010. Reuters Photo

Health
Health and Human Services Secretary Kathleen Sebelius announced the Obama administration pulled the plug on the CLASS Act, which was part of the sweeping 2010 health care reform law.

The Obama administration cut a major long-term health provision Friday that was part of the sweeping 2010 health care reform law, with officials saying they could not model the plan as both a voluntary and budget-neutral one.

The provision faced critics from the start of its proposal, but its defeat was solidified Friday when the Obama administration also gave in to its doubts.

What it was: The CLASS (Community Living Assistance Services) Act, which would have been voluntary and open to all Americans. Participants would have had to pay into the system for five years before receiving benefits. Once participants paid in, the idea was to have at least a $50-a-day benefit in the event of illness or disability.

But Republicans derided it from the start, incredulous that this could be a way to promote the budgetary savings of Obama's health care law, which many consider the president's signature legislative achievement to date.

The nonpartisan Congressional Budget Office had estimated that the CLASS Act would reduce the budget deficit by $70 billion in its first 10 years. But it also said the act would subsequently lose money in future decades, as pay-ins would be exceeded by benefits.

So, what does it mean? Here are some points to take away from the CLASS Act's termination:

More political banter over more of the law. Republicans are already hailing the program's death as a success, and to their credit, they have been most skeptical of the provision since the Affordable Care Act was passed in 2010.

Health and Human Services Secretary Kathleen Sebelius said in February that her agency had trouble finding a financially solvent way to make the program work. On Friday, she got rid of it.

So, after the CLASS Act's termination, Republicans came out and said this wouldn't be the only provision of the health care law that fails. Democrats, taken aback, urged HHS to try to revamp the provision. But that would require another bill, and another passage through Congress.

We do not have a path to move forward, Kathy Greenlee, assistant secretary of aging from the Health and Human Services department and administrator of the program, said in a call with reporters Friday.

Everything we do to make the program more [financially] sound moves us away from the law, and increases the legal risk of the program.

That quote will be eaten up by Republican presidential candidates, all of whom have derided the provision at some point.

The same approach. The idea of the provision was to give elderly and disabled citizens the option to stay in their homes late in life, rather than other long-term, costly options such as nursing homes.

According to PBS, 70 percent of people turning 65 today will experience functional disability at some point in the future. If severe enough, they will need long-term care. Most now choose nursing homes or similar options, but most also would prefer to stay in their homes and maintain their lifestyles.

The giant wave of retiring baby boomers may be most affected by the repeal of this provision. There will be little option for them other than the same approach as exists presently in regard to later-life, long-term care.

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