Congress could fix CLASS by following the lead of nearly every other developed country in the world and turning it into universal insurance. A mandated program could make basic long-term care coverage available to all for an average monthly premium of only about $40, according to private consultants Avalere Health. And it could cut Medicaid long-term care costs in half, by about $50 billion. However, in today’s anti-government political environment, such a step is, shall we say, unlikely.
It may also be possible to repair CLASS through a series of technical changes, all designed to reduce premiums and make the product more attractive to healthy buyers. This morning, I participated in a panel at the Urban Institute that addressed those options. A podcast of the event is available here.
As you consider what to do about CLASS, keep the context in mind. Medicaid now pays more than $110 billion annually for the long-term care of both the elderly and disabled. It funds nearly half of all these services, and spends fully one-third of its entire budget on such care. By contrast, private long-term care insurance pays for less than 10 percent. And before they become eligible for Medicaid, millions of Americans go broke paying for these services out of pocket.
Even as nearly all Republicans and some Democrats in Congress try to kill CLASS, some of these same lawmakers also favor capping Medicaid’s federal contribution, which now covers about 60 percent of the program’s costs. This will inevitably result in fewer Medicaid dollars for long-term care. They are also proposing to freeze or cut a wide range of non-Medicaid benefits, such as Meals on Wheels, transportation, subsidized housing, and the like. The result: an already tattered support system for the frail elderly and disabled (especially those trying to remain at home) will become even more frayed.
That brings us back to CLASS. As poorly designed as it is, the program is an insurance-based alternative to means-tested direct spending programs that will be under growing stress in coming years.
Medical technology is making it possible to live with disabilities for a very long time. Americans are not financially prepared to support themselves through years of care. Few save or have any interest in buying private insurance.
For those who want to kill CLASS, I have a simple question:If government assistance is not the answer, and CLASS insurance is not the answer, what is?
Remind me, again, in light of the alternatives, what is so horrible about mandating a degree of personal responsibility? (Read Gleckman’s piece in full. If you’ve made this far, you’ve already read half of it. Go catch the rest.)