The Patient Protection and Affordable Care Act (PPACA) established a national, voluntary insurance program for purchasing community living services and supports known as the Community Living Assistance Services and Supports program (CLASS Act). The program came with a provision; a built-in requirement that the program be "actuarially sound" according to "techniques and methodologies...generally accepted within the actuarial profession" as certified by the Medicare Chief Actuary. CLASS was a key contributor to the passage of PPACA because it allowed proponents to claim the bill reduced the deficit by $70 billion - counting CLASS program enrollees' premiums as "revenue." (The program was set to start collecting premiums for eight years of the ten year budget window (at the time, 2010-2019), but not pay any benefits until 2017.)
As many expected, it was not possible for the actuarially sound requirement to be met. On October 14, 2011, Secretary of Health and Human Services Kathleen Sebelius reported to Congress that this problem could not be overcome, and “despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.” HHS recommended to suspend implementation of CLASS Act. See the full report here. (http://aspe.hhs.gov/daltcp/reports/2011/class/CLASSmemo.shtml)
Doctor Patient Medical Association supports the Obama Administration's decision to not implement CLASS. In addition, we support full repeal of CLASS to ensure that future administrations do not attempt to reinstate the program and provide a permanent fix. Unless the CLASS Act is repealed, the temporary protection of this suspension is to the whim of the Secretary of HHS. It is necessary to eliminate the underlying statutory provisions authorizing the program.
H.R. 1173, the “Fiscal Responsibility and Retirement Security Act of 2011,”authored by Charles Boustany, Jr., MD., passed the House on February 1, 2012 by the House voted 267–159. Senate, S. 720, the “Repeal the CLASS Entitlement Act” authored by Senator John Thune.
- CLASS Act was a “bait and switch” accounting trick designed to mislead the public and Members of Congress as to the real costs of the PPACA in order to mask over $70 billion in PPACA's total cost over its first decade - fully half of the claimed deficit savings by PPACA proponents.
- Senate Budget Committee Chairman Kent Conrad (D–ND) called CLASS “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”
- Congress should be making it easier for disabled Americans to save for future needs, expand access to affordable private long-term care coverage and better educate Americans about the need for retirement planning, rather than creating another unsustainable government run programs.
DETAILS OF CLASS
- CLASS Act is not insurance, but attempts in many ways to act in the manner of insurance. Although it is not an entitlement, it would create an expectation of continuity.
- There is no contract, so there is no guarantee of future benefits, nor is there any of a long list of consumer protections that private long?term care insurance carriers must provide under state and federal regulation.
- There is no medical underwriting – that is, premiums would not depend on an enrollees’ health status. It turns out that when anyone can enroll in an "insurance” program, and everyone has to be charged the same rates regardless of their risk of filing a claim, those who are most likely to need to coverage are also those most likely to enroll.
- CLASS has four protected classes of people. Low?income individuals and students pay just $5 per month while everyone else must make this up in their premium contribution. A significant part of the cost for unhealthy people is transferred to healthy people.
- Everyone who is over age 65 and has been in the program at least 20 years is protected from premium - providing an unfair transfer of liability.
WHAT ARE ALTERNATIVES?
- The private sector has the means to provide substantial, excellent long?term care coverage to a large sector of the population, if the public is interested in such insurance.
- Instead of CLASS, assistance from Congress can come in the form of allowing long?term care insurance to be offered through a Section 125 cafeteria plan. Providing more legitimate options without risking unknown future liabilities that taxpayers will ultimately be called to fund.