In a speech to the Kaiser Family Foundation earlier this week, U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius outlined a series of potential regulatory fixes to address financial concerns with the CLASS Act, a government run voluntary long-term-care insurance program passed as part of the health care law last March. Her comments came after a 10-month study of the issue by HHS. The CLASS program is slated to begin taking on enrollees following the October 2012 deadline for defining included benefits.
Secretary Sebelius’s comments came on the heels of a report released in December by President Barack Obama’s fiscal commission, which called the CLASS Act “unsustainable.” The concerns related to outsized benefits in relation to low premiums, in what is intended to be a self-sustaining program. The commission recommended that the program either be reformed or repealed to avoid the potential need for diverting general taxpayer funds.
Secretary Sebelius said that she and the president “recognized that the CLASS statute wasn’t perfect. Many of the changes proposed in the Senate health reform bill that would have improved the CLASS program’s financial stability were not included in the final legislation.” She expressed confidence that HHS could adequately address the concerns identified by the commission before the program goes live in 2012.
In the speech, Secretary Sebelius spelled out several potential fixes, while applying the ground rules that no traditional private underwriting criteria will be used and no taxpayer funds will be diverted to the program. Included among her list of changes were increasing participation by raising awareness, using information technology to streamline program administration, altering the employment and earnings requirements and closing certain loopholes that could allow people to skip premium payments without being penalized. Additionally, she specifically pointed out the problem inherent in the program of using flat premiums to pay for benefits that are indexed to inflation. In response, she revealed that HHS is considering indexing premiums along with benefits.
It is highly questionable that any of these changes will improve the solvency of the program, which is essentially an “opt-out public option” for long-term care (LTC) related expenses. The Big “I” has consistently raised concerns with the program’s structure and will continue to be active in the implementation of this provision of the new health care law as many details are yet to come.
Ryan Young (ryan.young@iiaba.net) is Big “I” senior director of federal government affairs.