The Obama administration will not implement the Community Living Assistance Services and Supports (CLASS) Act after determining that financing plans were not sufficient.
The program, which was part of the 2010 health care law was under increasing pressure from Republicans after a report showed the program was unsustainable.
“For 19 months, experts inside and outside of government have examined how HHS might implement a financially sustainable, voluntary, and self-financed long-term care insurance program under the law that meets the needs of those seeking protection for the near term and those planning for the future,” Secretary Kathleen Sebelius wrote in a letter to congressional leaders. “But despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.”
The nonpartisan Congressional Budget Office found the long-term care program would generate tens of billions of dollars between 2012 and 2021, when it was taking in premiums and paying out little in claims. But a top federal actuary warned that, in subsequent years, the program would end up paying out more than it took in.
Despite the elimination of the CLASS, the need for such a program isn’t going away.
“By 2020 we know that an estimated 15 million Americans will need some kind of long term care and fewer than three percent have a long term care policy,” she wrote.
In a statement released on Friday, AARP expressed its disappointment that the Secretary prematurely said she does not see a path forward to properly implementing CLASS.
“In fact, the CLASS actuarial report established that CLASS can still be designed to be a ‘value proposition,’ although development work still needs to be done. We urge the Administration to continue dialogue and development of a viable path forward,” said Joyce A. Rogers, Senior Vice President for Government Affairs at AARP.
“Medicare does not cover long-term care, and 70 percent of people age 65 and over will need long-term care services at some point in their lifetime. Families will continue to need a workable long-term care option to protect themselves, and CLASS was meant to help families plan and pay for their long-term care needs. A path forward is essential because the need for long term care will only continue to grow.”
Written by John Yedinak