The House Energy and Commerce Subcommittee on Oversight and Investigation and Subcommittee on Health held a hearing last week on the future of the unsustainable, poorly designed CLASS program now that it’s on life support (though it still has a heartbeat). As Heritage analysts have already pointed out, there is a lot to look into in this flawed program.
CLASS was created as a voluntary, government-run long-term care insurance program. According to the legislation, it would be fully funded from the premiums paid by its beneficiaries, requiring no federal taxpayer dollars. But experts and Members of Congress from both sides of the aisle have long warned that the program wouldn’t work and would eventually cost taxpayers a pretty penny.
The Department of Health and Human Services (HHS) recently dropped a bombshell on Obamacare when it announced it will not be implementing the program. Their official report raised concerns about adverse selection in the program, pointing out that “if healthy purchasers are not attracted to the CLASS benefit package, then premiums will increase, which will make it even more unattractive to purchasers who could also obtain policies in the private market. This imbalance in the beneficiary pool would cause the program to quickly collapse.”
Last Wednesday before the committee, HHS officials Kathy Greenlee and Sherry Glied testified together that “we have not identified a way to make CLASS sustainable, legal and attractive to potential buyers at this time.”
On top of its budgetary concerns, extensive Heritage research has laid out why CLASS would make long-term care insurance even worse than what’s currently available:
The average monthly premium for private LTC insurance in 2007–2008 was $184. This is about 25 percent less than the estimated average premium of $240 for the CLASS program as calculated by the CMS Office of the Actuary. However, the plans are not direct comparisons. The CMS assumes an average daily benefit of $50 per day for an unlimited period. By comparison, most private offerings pay benefits of $120 to $400 per day, averaging $165 per day.
CLASS is a bad deal for both taxpayers (who would likely have to bail out the program) and beneficiaries (who would be better served by choosing among private options). While there remains a growing problem regarding the lack of enrollment in long-term care insurance in the United States, CLASS is not the solution.
Though its implementation has been indefinitely halted, Congress should act to ensure that it doesn’t once more rear its ugly head. As Representative Charles Boustany (R–LA) advised in his testimony, “Congress should repeal it, instead of waiting for bureaucrats to change their minds. CLASS is the wrong solution to America’s long-term care needs.”