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Obama Administration Shelves Long-Term Care Insurance Plan For Workers

First Posted: 09/22/2011 6:03 pm Updated: 11/22/2011 4:12 am

By RICARDO ALONSO-ZALDIVAR, ASSOCIATED PRESS

(AP) WASHINGTON -- The Obama administration has shelved a financially troubled long-term care insurance plan. Officials said Thursday the staff has been cut and it's an "open question" if the program will be implemented.

Known as CLASS, the Community Living Assistance Services and Supports program was created under President Barack Obama's health care law as a voluntary long-term care insurance program for workers. Doubts about its financial viability were raised early on and it has since languished in bureaucratic limbo, with Republicans in Congress pushing for repeal or defunding.

In an interview Thursday, a top technical expert working on a financial plan for CLASS said the eight people on the program staff were told last week they would be reassigned.

"They told us that they were going to take a pause," said Bob Yee, an actuary responsible for long-range cost estimates. Yee said he decided after getting the news to leave the government, and plans to return to private industry.

"It's difficult trying to find a solution without an in-house actuary," said Yee. "My feeling is that they are not going to make some wonderful discovery. You draw your own conclusion about what's going to happen." Yee's departure was first reported by The Wall Street Journal.

A central design flaw has dogged CLASS from the beginning. Unless large numbers of healthy people willingly sign up, it will create a situation where soaring premiums for a smaller group of frail beneficiaries eventually destabilize the program.

The Associated Press reported last week on emails showing that technical experts in the government said CLASS could not be kept afloat indefinitely without a taxpayer bailout, or a requirement that workers enroll. But the Obama administration and Democrats in Congress pressed on with the idea, a longstanding priority for the late Sen. Edward M. Kennedy, D-Mass.

Technically, Health and Human Services Secretary Kathleen Sebelius has most of next year to make a decision. As long as CLASS remains on the books it counts as reducing the deficit in the ten-year estimating window used for federal budget purposes. That's because CLASS would collect premiums for a number of years before it paid any benefits. The budget quirk may make it tempting to maintain at least a shell of a program.

HHS issued a statement Thursday saying that while the staff of the CLASS office has been reduced, reports that the office is closing are not accurate.

"We are continuing our analysis of this program," said the statement. "As we have said in the past, it is an open question whether the program will be implemented."

Under CLASS workers would pay an affordable sum of around $100 a month or less. In exchange, they would receive a modest daily cash benefit averaging no less than $50 if they become disabled later in life. Beneficiaries could use the money for services to help them stay at home, or to help with nursing home bills.

Nursing homes and long-term care providers support the program, while private long-term care insurance companies oppose it.

LeadingAge, a trade group representing nonprofit nursing homes and long-term care providers said it will continue to push for the program.

"There is no other solution on the table right now to solve the crisis of paying for long-term services and supports," Larry Minnix, the group's CEO, said in a statement.

Yee, the departing expert, said the staff was not told how long the program would be paused. "Once you take a pause, it's hard to start back up," he said.

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Filed by Paige Lavender  |