CBO Eyes LTC Proposal

Under the original version of the CLASS Act provision, the HHS secretary would be allowed to reduce all benefits to the daily minimum of $50 and, if that action was inadequate to avoid insolvency, to increase enrollees' premiums.

The Judd amendment would require the HHS secretary to set premiums at a level that would ensure program solvency.

THE CBO ANALYSIS

The current version of the CLASS Act program provision would reduce the federal deficit during the first 10 years but could increase the deficit significantly in later years, the CBO says.

"Premium collections would exceed benefit payments during the 2010-2019 period by about $59 billion," the CBO says.

The early surplus would be a result of the fact that participants could not begin collecting benefits until 2016, at the earliest, because of the 5-year vesting requirement, the CBO says.

To make the program actuarially sound, the monthly premiums would have to be higher or the minimum monthly benefits would have to be lower, the CBO says.

THE ACLI WEIGHS IN

The American Council of Life Insurers, Washington, has issued a statement questioning the adequacy of proposed CLASS Act funding.

In addition to lacking adequate funding, the proposed CLASS Act program "may not adequately cover individuals for their long-term care needs," the ACLI says.

The program also could increase consumer confusion about the magnitude of LTC planning needs, the ACLI warns.

"With the cost of a 1-year stay in a nursing home expected to rise to $270,000 in 30 years, it is unlikely that the CLASS Act program would be adequate to completely supplement that cost," the ACLI says.