• Gleckman on what next after CLASS

    Howard Gleckman noting some options given the demise of CLASS. He highlights several key points:

    One thing Gleckman suggests to move ahead:

    • setting up a voluntary program provided via private insurers, with numerous benefit options

    Allow insurance buyers to select from a menu of policies, including, say, a small daily benefit for life (like CLASS); $150 a day for three years; or $200 a day for five years. Companies could compete on premiums but would have to offer identical benefits so that consumers could easily compare policies. (similar to Medigap plans)

    The most interesting aspect of the HHS report on CLASS was the conclusion that consumers were not interested in the benefit structure offered in CLASS (small benefits on the order of $50/day for unlimited period of time). From the memo of Kathy Greenlee in the CLASS office to Sec. Sebelius recommending CLASS not go ahead:

    We developed a broad range of alternative CLASS benefit plan options….the benefit design that follows from the most natural reading of the statute….which calls for an average fifty dollar per day benefit for a beneficiary’s lifetime, diverges significantly from the design most buyers in the private market choose. Most buyers prefer higher daily benefits over a few years.

    In the end, this may have been the most fundamental problem with CLASS; small benefits for a long period of time are not the type of LTC benefits that those interested in purchasing insurance want to buy. A big problem for a voluntary program. And the law as passed didn’t allow for changing the benefit structure appreciably without further legislation, which is politically impossible right now. There are options available to move ahead on LTC, but all will require the same impossible legislation, even if the vehicle used is private insurance. We appear likely to stumble into continuing with the default system that everyone knows has flaws, because of our inability to take any policy steps in LTC.

    • a little OT, but what if LTC insurance were handled like health insurance is now. Your employer can purchase LTC insurance tax free as a benefit for you the employee.
      Have LTC insurance be “tokens” where for each amount put in you gain a fixed amount of coverage, rather than as a policy that needs to be continually held. So for example your employer could purchase you 5000$ worth of coverage for 1000$. If the next year they made the same investment you would have net 10000$ worth of coverage, and so on… With such structure LTC plans could be combined/portable even as people switch jobs or lose/gain employment.
      Anyways, I know this will probably come with many of the problems of health insurance today (how to cover those whose employers don’t offer insurance, or those who are not working…) but at least it could build a large pool of LTC insured individuals, and enroll them at a time when future LTC needs are hard to predict (30’s-50’s) thus creating good risk sharing.