The Obama administration’s health care reform legislation suffered an apparent casualty last week when the U.S. Department of Health and Human Services (HHS) indicated it wouldn’t pursue implementation of the Community Living Assistance Services and Supports (CLASS) program (also known as the CLASS Act). In a letter to the U.S. Congress about the CLASS Act, HHS Secretary Kathleen Sebelius stated that she did “not see a viable path forward for CLASS implementation at this time.” Sebelius came to this conclusion after the HHS reviewed a comprehensive analysis of the CLASS program.
The CLASS Act was a part of the Patient Protection and Affordable Care Act (PPACA) that was designed to create better long-term-care insurance options for individuals. According to the law, all CLASS benefits had to be completely funded through enrollee premiums without any taxpayer subsidy. The legislation also mandated that the program must be actuarially sound and financially solvent for 75 years.
The CLASS program report examined how the legislative requirements couldn’t be met at this time. The report noted that premiums for a basic plan under the program could cost between $235 and $391 a month or even as much as $3,000 a month in certain circumstances. The report also indicated that it would be hard to find healthy buyers who could obtain policies in the private market and were interested in purchasing the benefit package described in the CLASS Act. According to the report, such an “imbalance in the beneficiary pool would cause the program to quickly collapse.”
Critics of the PPACA have hailed this turn of events as a sign that the health care reform legislation as a whole is doomed to fail. However, many analysts have speculated that the demise of the CLASS Act won’t really affect implementation of the rest of the PPACA since the CLASS Act was a separate program isolated from the rest of the law.