Flying Beneath the Radar of Health Reform

The Community Living Assistance Services and Supports (CLASS) Act

Edward Alan Miller, PhD, MPA

Disclosures

Gerontologist. 2011;51(2):145-155. 

In This Article

Abstract and Introduction

Abstract

The Patient Protection and Affordable Care Act attempts to address prevailing deficiencies in long-term care (LTC) financing through the Community Living Assistance Services and Supports (CLASS) Act, a national voluntary LTC insurance program administered by the Federal government. The CLASS Act is intended to supplement rather than supplant assistance received from other payers. Furthermore, its reliance on a cash benefit allocated by beneficiaries with the assistance of counseling services makes it consistent with the consumer-directed philosophy increasingly favored by the LTC advocacy community. Largely due to inadequate take-up, however, particularly among better than average risks, it is unlikely that implementation of the CLASS Act will fundamentally alter the current public–private partnership for LTC financing. Instead, voluntary enrollment combined with a lack of medical underwriting could lead to disproportionate numbers of high-cost enrollees. This could result in premium increases that further discourage participation on the part of the broader population. Barring making the program mandatory, there are a number of comparatively minor changes policymakers could make to strengthen the risk pool, though doing so will involve a trade-off between attracting better-off risks while eschewing those likely to need the benefit most. Thus, although the CLASS Act may provide a meaningful benefit for those who enroll, its impact on improving the affordability of LTC for most Americans will likely be limited. Most will continue to rely on substantial unpaid care, out-of-pocket payments when formal care is required, and Medicaid when all other money has run out.

Introduction

Substantial deficiencies characterize the way long-term care (LTC) is financed, both for the 10.3 million Americans who require services and supports (Kaiser Family Foundation, 2009a) and for the growing numbers of functionally and cognitively impaired individuals who will need assistance in the future due to population aging. Currently, a large proportion of need goes unmet, including one in five community-dwelling adults with activity of daily living (ADL) limitations (Komisar, Feder, & Kasper, 2007). Moreover, of those receiving support, most (78%) rely exclusively on unpaid caregivers (Rogers & Komisar, 2003). An overriding challenge is the high cost of services. The average annual cost of institutional LTC includes $36,372 for assisted living and $72,270 for a semiprivate room in a nursing home ($79,935 for a private room; Mature Market Institute, 2009). The average annual cost of community-based care includes $17,420 for 5 days of weekly adult day services and $27,664–$30,000 for 4 hr of homemaker, companion, and/or home health care services, 7 days per week. Relatively few people have purchased private LTC insurance. Although Medicaid serves as a safety net for those needing LTC, it requires potential recipients to meet asset and income thresholds or accrue medical expenses in excess of their income before they can become eligible.

President Clinton's Health Security Act included a state-run federally financed social insurance program for severely disabled individuals in need of home care (Wiener, Estes, Goldenson, & Goldberg, 2001). Following its demise in 1994 proposals to reform the way LTC is financed shifted toward much more modest efforts to promote personal planning for LTC needs in later in life and to spur purchases in the private LTC insurance market. It also shifted toward making sure that those who qualified for Medicaid had indeed exhausted their private assets first. The Patient Protection and Affordable Care Act (PPACA; P.L. 111–148) takes a substantially different tact, establishing the Community Living Assistance Services and Supports (CLASS) Act (Title VIII). The CLASS Act is the legacy of the late Senator Edward M. Kennedy who first introduced it in Congress in November 2005. It recognizes that the need for LTC is a risk, not a certainty, which if spread across the broader population would mitigate reliance on out-of-pocket spending on the part of care recipients and their families and, in turn, public safety net programs. This essay argues that although the CLASS Act will provide a meaningful benefit for those who enroll, its impact on improving the affordability of LTC for most Americans will be limited.

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