CLASS Act, round ad nauseum

It clearly has flaws and I think that it is true that many LTC types knew this and felt that CLASS needed a conference bill more than most parts of the ACA. However, CLASS could be easily fixed with a change in the definition of work, a simple one time underwriting (can you climb one flight of stairs would likely do it) and auto enroll procedures if anyone was actually interested in the policy. People can of course be opposed to the government trying to set up a self sustaining LTC insurance scheme as a matter of principle, but then how do they plan to insure long term care?

The thing that irritates me most about the debate is the singular focus on the deficit accounting angle. Even if CLASS succeeded in policy terms (it became a self sustaining LTC insurance program) it would reduce the deficit for the first 10-15 years and add to it later simply because of the accounting rules used by CBO and the need to pre-collect premiums if the program was to be self sustaining. This doesn’t mean the CBO’s rules are flawed—you need one set of rules with which to judge policy and CBO is easily my favorite institution. However, deficit reduction/increase estimates just can’t answer every important policy question.

It is easy to get rid of CLASS. It is hard to figure out how to provide long term care. And the baby boomers are coming….

Update: Sec. Sebelius announced today that HHS is suspending implementation of CLASS. Four page report here that I haven’t read yet and ~50 page actuarial analysis here. (h/t @sarahkliff).

Update 2, 5:30pm: After just a quick read, two thoughts. First, the memo and and the analysis is very clear in describing the challenges and this is not a sugar coated analysis at all. High marks to HHS for taking this seriously. Second, it boiled down to questions about whether policy changes undertaken to ensure solvency (e.g. increase definition of work, benefit structure changes, some type of underwriting) were consistent with the statute as written. The stronger/better the policy changes were to move toward self sufficiency of CLASS the more likely they were to not survive legal challenges that the changes were inconsistent with what passed in the ACA. If such additions were later stripped out by legal challenges that would be a huge mess. In short, CLASS needs another piece of legislation to make it sustainable and that would have to garner 218 votes in the House and 60 in the Senate and that is not going to happen. So, they have decided to not move ahead. More next week.

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