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Life Health > Health Insurance > Your Practice

Obama Administration Downsizes CLASS Act Office

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WASHINGTON BUREAU — The Obama administration is reassigning the workers in the office that was developing the Community Living Assistance Services and Supports (CLASS) Act long term care benefits plan – a program that is part of the Patient Protection and Affordable Care Act (PPACA).

Erin Shields, director of communications for health issues at the U.S. Department of Health and Human Services (HHS), would say only that the office was being “reduced.”

Shields made the comment after Bob Yee, the actuary for the CLASS Act office, PPACA toolkittold friends in an e-mail he had lost his job effective Friday.

Yee said in an interview that the 8 members of the CLASS Act unit were told last Thursday that they were being reassigned effective Friday. Yee said he is leaving because he is an actuary and there is no comparable position for him to go to.

Shields said that the office is not closing and that HHS is continuing its analysis of the CLASS Act program.

“As we have said in the past, it is an open question whether the program will be implemented,” Shields said. “A CLASS program will only be implemented if it is fiscally solvent, self-sustaining, and consistent with the statute.”

The CLASS Act provision in PPACA — a provision strongly supported by the late Sen. Edward Kennedy, D-Mass. — is supposed to create a national, voluntary insurance program that workers would use to buy LTC protection at the worksite.

The office responsible for implementing the CLASS Act provision was created in January and has been headed by Kathy Greenlee, assistant HHS secretary for aging.

PPACA calls for HHS Secretary Kathleen Sebelius to define the CLASS benefit by October 2012.

Jesse Slome, executive director of the American Association for Long-Term Care Insurance, Westlake

Village, Calif., said in an interview that he had not heard about the CLASS Act office restructuring.

But “President Obama and the Democrats are in an impossible situation,” Slome said. “They can not openly end CLASS outright because it opens the door for more Republican calls to repeal health care reforms. So, closing the CLASS office, if true, is a small step toward ending the unworkable effort and HHS and [HHS Secretary Kathleen] Sebelius deserve credit for standing by their conviction that they would not bring out a new entitlement unless they believed it will work.”

Slome said the United States needs a comprehensive plan to address the future long term care needs that will shortly arise as a result of the aging of the baby boomers.

But “CLASS is not the answer,” Slome said. “Even the best and brightest actuarial minds in the industry could not devise a way to make the effort work.”

To have CLASS succeed, HHS would have to make it affordable, but, because the CLASS Act plan would be a voluntary plan, the plan would could face enormous risk of adverse selection, with only unhealthy workers signing up, Slome said.

The CLASS Act provision faced strong opposition in 2010, while PPACA was being debated.

The program is supposed to collect premium payments for 5 years before paying any benefits. One reason the program stayed in PPACA despite the intense controversy surrounding was that budget analysts said it would produce a budget surplus of about $70 billion during the first 10 years that PPACA was in effect.

Critics have argued that using the initial CLASS Act surplus to make the overall federal budget look good is a gimmic. Critics contend that the program managers would have to raise premiums substantially over time to keep the program solvent, and that, over time, the program would fall into a costly deathly spiral.

The program has become a favorite target for Republicans.

Analysts at the Deloitte Center for Health Solutions, Washington, recently reported that the leaders of the Republican-controlled House Energy and Commerce Committee have asked groups such as America’s Health Insurance Plans, Washington, and AARP, Washington, for information about negotiations with the Obama administration about the LTC program provisions and other provisions in PPACA.

Republican senators have asked HHS for the CLASS Act premium, participation and actuarial models that were created before PPACA was passed, the analysts say.

Other CLASS Act coverage from National Underwriter Life & Health:


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