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Health Law and Policy Update: Federal government suspends CLASS Act, a voluntary long-term care program

This week's updates

Headlines of the week

Federal government suspends CLASS Act, a voluntary long-term care program
The Department of Health and Human Services announced Oct. 14 it would suspend implementation of a voluntary program included in the Patient Protection and Affordable Care Act that was designed to help people cover some long-term care costs. The program was known as Community Living Assistance Services and Supports, or the CLASS Act.

The CLASS Act would have provided people with an opportunity to participate in a program at work that would have helped them pay for long-term care services when they needed them. Participation would have been voluntary, and people would have had to contribute for at least five years to be eligible for benefits. The goal was to offer enrollees about $50 a day to spend on long-term care -- either nursing home care or services that would allow them to stay in their homes. The Affordable Care Act emphasizes programs that facilitate home and community based care and supports, and CLASS was one piece of that effort.

The Department of Health and Human Services was required to examine the sustainability of the CLASS program over the long term (75 years) and assess its financial solvency. After significant analysis, the department decided the program is not sustainable in its current form. The agency's analysis found significant risk that CLASS premiums would be too expensive to attract healthy people and would therefore not be self-sustaining over time.

Milliman, a consultancy, issued a paper before passage of the Affordable Care Act that helps explain some of the concerns about long-term sustainability in a CLASS-like system. It explores the potential for adverse selection in a voluntary, guarantee-issue program funded only through premiums.

CLASS and similar efforts remain important. According to the Department of Health and Human Services:

  • Almost seven in 10 Americans turning age 65 today will experience functional disability at some point in their lives and will need help and support with activities of daily living.
  • 40 percent of long-term care users are between the ages of 18 and 64.
  • Long-term care costs average between $70,000 and $80,000 a year.
  • People who receive long-term care services at home spend $1,800 a month on average.

Medicare does not pay for long-term care. Medicaid does, but people must spend down their assets to qualify. In addition, Medicaid costs are increasing, and states, including Colorado, worry more and more about how to pay for their share of the program.

Long-term care insurance can be costly, inadequate and difficult to purchase, particularly for people with pre-existing health conditions or disabilities.

It is critical that lawmakers make real efforts to meet the needs of an aging population. Giving people a chance to take responsibility for their long-term care needs, and easing the burden on government programs remains prudent policy.

Some critics of health reform have framed last week's developments with the CLASS Act as evidence of a structural flaw in the Affordable Care Act. That analysis does not withstand scrutiny. While CLASS embodies an important idea, it was a small piece of the health reform law and would have operated as a stand-alone program. The revenue raised by the CLASS Act was designated to support the CLASS program, not the Affordable Care Act as a whole. Its demise means nothing for the other pieces of health reform, including coverage expansions, the formation of health insurance exchanges and many other provisions.

Find more coverage from The New York Times, an opinion piece Health and Human Services Secretary Kathleen Sebelius wrote for The Huffington Post, and a letter Sebelius wrote to Congress explaining the move. The Center on Budget and Policy Priorities produced a paper in 2010 explaining the key elements of the CLASS Act.

What's new

Guide to Grants in the Affordable Care Act shows opportunities for funding
Sen. Michael Bennet's office released a very accessible guide to the many grants and opportunities for demonstration and pilot projects available under the Patient Protection and Affordable Care Act. The guide describes funding opportunities, says whether funds for particular grants have been appropriated, provides links to further information and notes where Colorado has already received grant money. Some of the grants reported in the guide include:

  • Medicaid Money Follows the Person Demonstration Grants, providing an additional $2.7 billion. Colorado received $2 million in 2011 and will receive more than $22 million through 2016.
  • Medicaid Infant and Early Childhood Home Visiting Program, $1.5 billion.
  • Pregnancy Assistance Grants, $250 million, appropriated.
  • Geriatric Nursing Education and Training, $2 million each for up to 10 states for demonstration projects.
  • Quality Measure Development, $75 million each year through 2014, subject to appropriation.
  • Rural Physician Training Grants $4 million each year through Fiscal Year 2013, subject to appropriation.

Group will help uninsured people enroll in coverage provided under health reform
A group devoted to helping people enroll in new coverage opportunities available under the nation's health reform law in 2014 launched last month. The organization, called Enroll America, is a collaboration including representatives of hospitals, insurance companies, drug companies, physicians, community health centers, free clinics, consumers, and people with major illnesses and disabilities.

"Enroll America is an historic effort. It is the first time such major, diverse health groups - with very different constituencies and perspectives on health policy - will work closely together, and the expected success of this collaboration will bring about the largest expansion of health coverage in our nation," Executive Director Rachel Klein said in a Sept. 14 news release.

Health Law and Policy Update is issued weekly by the health staff of the Colorado Center on Law and Policy. Subscribe by e-mail or read previous editions.

Health Care Director
Elisabeth Arenales  

Health Care Attorney
Adela Flores-Brennan  

Special Counsel
Ed Kahn  

Rice Fellow
Danny Rheiner

Communications Director
Perry Swanson

Released Oct. 21, 2011