Thursday, January 14, 2010

Is the long term care component of the health care bill really a “CLASS Act?”

The healthcare debate continues to be controversial and complex, and the CLASS Act seems to fall into both of those categories. The Class Act is one of the health reform components receiving a lot of attention—it is short for “Community Living Assistance Services and Supports” Act, and it would provide a voluntary system of long-term care insurance for Americans.

The way it works is that individuals would automatically be enrolled in the program through their employer unless they choose to opt out. The employer would take out monthly premiums from pay and send the funds to a “Life Independence Account.” After employees pay into the account for five years, they would be eligible to receive funds if they become disabled -- meaning they are unable to perform two or more daily activities like bathing, or dressing. Those eligible to receive benefits would receive at least $50 per day in assistance for the remainder of their lives.

Arguments in support of and in opposition to the new program:

Supporters emphasize that there is a huge population in need of care who would rather stay in their communities, but are forced to spend down their savings to qualify for Medicaid and enter nursing homes, or they require family members to provide unpaid caregiving assistance. Approximately one-fifth of Americans provided care for others, according to the National Alliance for Caregiving. Elderly spouses, most often wives, provided care for relatives for more than 30 hours each week.

If the CLASS Act (the Act) was in place, care-providing women might have access to paid help for a few hours each day. Two thirds of working caregivers are forced to take time off from work to provide care, so this benefit could help family caregivers to improve and maintain their own job security. Finally, Community living is much less expensive than living in facilities and the Act could help limit long-term care costs.

Opponents are not as much opposed to the rationale for the program, as they are focused on the financial details -- the program’s administration and its long-term impacts on the federal budget. Whether the program would be financially sustainable also remains debatable. The short-term financial outlook for the program is good, because individuals will pay premiums without receiving benefits. However, once participants start to become eligible for benefits, the trend is expected to turn in the opposite direction.

Another related concern is that only people who are prone to long-term illness may stay enrolled in the program, which would make higher premiums necessary to support the high-need participants. Finally, some opponents believe that this program will lead Americans to develop a false sense of security in terms of their long-term care insurance needs. While the Act is not meant as a substitute for private long-term care insurance, the concern is that people enrolled in the federal program will think they have all of the coverage they need.

If you wish to educate yourself about long-term care insurance further, WISER’s website has several informative fact sheets on the subject.

No comments: