'Gang of Six' Deficit Plan Would Cancel Long-Term Care Program

A deficit-reduction plan that is gaining traction in Congress would do away with a new national long-term care insurance program aimed at keeping the elderly and disabled out of nursing homes and off the Medicaid rolls.

Repeal of the Community Living Assistance Services and Supports (CLASS) Act is included in the $3.7 trillion deficit-cutting proposal of the "Gang of Six," a bipartisan group of senators working on a way to allow the President and Congress to raise the debt ceiling. A little-noticed part of the health reform law, CLASS would provide Americans with a new option to finance long-term services and care in the event of a disability by establishing a voluntary, self-funded national long-term care insurance program. The program's elimination "would be a major setback to advocates for improving access to long-term care," according to Politico.

Under CLASS, which was Sen. Edward M. Kennedy's final legislative initiative, Americans who wish to be in the program would pay a monthly premium for five years, after which they would be vested and eligible to receive benefits averaging between $50 and $75 a day to pay for a range of long-term care services that would help them stay in their homes, or the money could be used to defray the cost of nursing home care.

Although its daily benefit is modest in comparison to long-term care costs, advocates say the program will accomplish three much-needed goals: prompt more individuals to contribute to their own long-term care, help the elderly and disabled remain at home rather than move to nursing homes, and take a load off the Medicaid program.

"The reality is people are without protection against the catastrophic and uncertain risk of needing long term care," Judy Feder, a professor at the Georgetown Public Policy Institute, told the Boston Globe. "This is a way to have people pay in advance to provide a modest amount of protection to help them manage as they need long-term care."

The CLASS Act would actually help reduce the deficit over its first decade, bringing in about $83 billion as it collects premiums. But there is disagreement on whether the program will be financially sustainable in the long term. By law, all the program's benefits must be paid for by premiums, not taxpayer dollars, and premiums must be set so that the program will be solvent for at least 75 years. According to the Congressional Research Service, premiums would likely start at between $123 and $240 a month. (Students and those below the poverty level would pay just $5 a month.)

Critics contend that because the program is voluntary, only those with expensive health problems will sign up for it. If too few younger, healthier workers participate, the resulting "adverse selection" will mean that the benefits will be too meager or the premiums too high for the program to work. Analysts at the Center for Retirement Research at Boston College have estimated that if fewer than 1 percent of workers under age 40 sign up, the monthly premium will have to be set at $312, much too expensive for most people to participate.

HHS Says Program Can Work

Health and Human Services Secretary Kathleen Sebelius admits that the program as outlined by Congress is flawed, but says she can adjust it enough through regulations to make it work. Health and Human Services must design the CLASS program by October 1, 2012.

"If the program is insolvent, it would be shut down," points out Connie Garner, the executive director of advanceCLASS, an advocacy group formed to promote the program. Garner says that while the CLASS Act does not establish a new entitlement program, repealing it would put pressure on an existing one, Medicaid.

The threat to the CLASS Act comes just as a new study by AARP finds that the economic value of the work provided by unpaid family caregivers has risen dramatically. The estimated dollar value of unpaid caregiving to adult family members rose 20 percent between 2007 and 2009, from $375 billion to $450 billion. The CLASS Act would allow families stretched thin by caregiving responsibilities to afford paid help.

President Obama has supported the CLASS Act in the past but it is unclear whether he will take a strong stand for it as budget negotiations intensify.

"Congress can repeal CLASS," Howard Gleckman, a fellow at the Urban Institute recently commented, "but it can't slow the aging of America and the growing need to provide personal care for the frail elderly or others with disabilities."

The "Gang of Six" consists of Republicans Saxby Chambliss (GA), Tom Coburn (OK) and Mike Crapo (ID), and Democrats Kent Conrad (ND), Dick Durbin (IL) and Mark Warner (VA). For an executive summary of the "Gang of Six" deficit plan, click here. For an article on long-term care providers' outraged response to threats to the CLASS Act, click here.

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