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March 15, 2011 at 08:00 PM
An arm of the House Energy and Commerce Committee plans to look at the sustainability of the Community Living Assistance Services and Supports (CLASS) program Thursday.
The committee’s health subcomittee has organized a CLASS program hearing to review early efforts to implement Section 8002 of the Patient Protection and Affordable Care Act (PPACA) and hear from witnesses who have thoughts on whether the program is, or could be made to be, actuarially sound.
The program is supposed to be a voluntary, premium-supported long term care (LTC) benefits program that will provide $50 in cash benefits per day, indexed for inflation, in exchange for a relatively low premium.
Congressional budget analysts view the program as being good for the federal budget deficit in the early years, because, for several years, program managers would collect premiums for workers without providing benefits. Many actuaries, including Rick Foster, the chief actuary at the federal Centers for Medicare and Medicaid Services, say the program could suffer from underwriting losses early on, then increase premiums to make up the difference. A resulting series of losses, premium increases and decisions by younger, healthier insureds to drop coverage could lead to a death spiral that would kill the program, critics say.
Other critics say the daily benefit would be far too low to cover the full cost of any kind of nursing home care.
U.S. Health and Human Services Secretary Kathleen Sebelius has suggested that the Obama administration might want to make changes to the program, such as enrollment restrictions that would discourage workers from paying for coverage only when they expect to need long term care.
