Obama Drops Long-Term Health Care Program

Oct 14, 2011 5:00pm

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The Obama administration is abandoning a long-term health care insurance program that was part of the Affordable Care Act passed last year, saying it could not find a financially sustainable model for it.

The Community Living Assistance Services and Support (CLASS) program was meant to be a volunteer program in which workers would pay a monthly premium. In return, they would get cash later in life for long-term care services such as nursing homes. Proponents of the program said it would reduce dependence on Medicaid and fill the void in services for the elderly.

More than 10 million Americans need long-term services and that number is expected to grow, according to an analysis by Georgetown University’s Health Policy Institute.

During the health care debate, Republicans raised concerns about the viability of the plan and inserted a provision that required HHS to design a program that would be actuarially sound and financially solvent for at least 75 years before it could be implemented.

Health and Human Services Secretary Kathleen Sebelius sent a letter to Congress today saying the agency could not find such a model.

“Over the last 19 months, we’ve examined the long-term care market, modeled possible plan designs, and studied the CLASS statute, consulting at every step of the way with outside actuaries, insurers, and consumer groups,” Sebelius wrote in an op-ed in the Huffington Post today.

“Recognizing the enormous need in this country for better long-term care insurance options, we cast as wide a net as possible in searching for a model that could succeed,” she wrote. “But as a report our department is releasing today shows, we have not identified a way to make CLASS work at this time.”

Republicans were quick to step on the announcement.

“The Obama administration today acknowledged what they refused to admit when they passed their partisan health bill: the CLASS Act was a budget gimmick that might enhance the numbers on a Washington bureaucrat’s spreadsheet, but was destined to fail in the real world,” Senate Minority Leader Mitch McConnell, R-Ky., said in a statement. “We should repeal the CLASS Act and the rest of the health spending law and replace it with the type of common-sense reforms that lower costs and Americans support.”

AARP’s senior vice president for government affairs, Joyce A. Rogers, said she was “disappointed” by the administration’s decision.

“While we appreciate that the Secretary has recognized the challenge of long term care has not gone away, we’re disappointed that the Secretary has prematurely stated she does not see a path forward to properly implement CLASS,” she said in a statement.

The Class Act was a top priority for late Sen. Ted Kennedy, who championed health care issues during his time in office.

The Congressional Budget Office estimated that the provision would reduce the federal budget deficit by $70.2 billion over 10 years, and reduce dependency on Medicaid.

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