Congress, Obama Show Their CLASS

Many of the press reports about the nation’s new health care reform program gave little notice to the impact it will have on the way we finance long-term care in this country.

In many ways, we have the late Sen. Edward M. Kennedy to thank for inclusion of long-term care measures in overall health care reform, because it was his proposed “CLASS Act” legislation, incorporated in the U.S. Senate version, that became part of the final Patient Protection and Affordable Health Care Act on March 30.

Kennedy understood that most Americans have not planned for what to do to pay for nursing home care and other services that are frequently needed later in life, and people generally end up paying for long-term care by spending down their assets until they have depleted them, thereby becoming eligible for Medicaid.

For the first time, we have a national program that address that lack of preparedness.  The Community Living Assistance Services and Supports (CLASS) Act offers to change that dismal impoverishment scenario.

The CLASS Act provisions of health care reform create a voluntary long-term care insurance program, which will help individuals pay for non-medical services and supports, such as nursing homes, home care and personal care.  The program will be financed through automatic payroll deductions, and, while it is voluntary, employees will be automatically enrolled, but will have the choice to “opt out.”

Provisions of the CLASS Act were supported by organizations such as the American Association of Homes and Services for the Aging, of which VillageCare is a member.  AAHSA’s President and CEO Larry Minnix was one of those at the national level who had urged Senator Kennedy to put forth long-term care reform legislation in 2009.

When President Obama signed the historic health reform legislation, Minnix said that CLASS Act provisions “included in the legislation will help seniors and people with disabilities obtain the services and supports they need to stay functional and independent, while providing them with choices about community participation, education and employment.”

In our community, every day, people are confronted with the challenges of living with a chronic illness or disability.  Not only do the decisions they have to make impact on their independence and ability to live at home, but the costs they face can be staggering.

The new, government-operated long-term care insurance program will provide enrollees with a basic per-day cash benefit, which will average about $50 a day, based on level of disability.  While the benefit isn’t going to pay for the entire costs of care, it will go a long way in helping people to be prepared when they are confronted with the expense.  Keep in mind that some 10 million Americans are already receiving some type of long-term care service.

Long-term care comes in many forms, can be intensive and costly, and it can be required for many years.  Or it can be needed just for a temporary period, such as for rehabilitation to recover from a surgical procedure, or for problems that are triggered by a medical condition, such as a stroke.  Besides nursing homes and home care, long-term care includes assisted living, adult day health care, short-term rehabilitation and other support services, including specialty care for those with Parkinson’s disease and those with Alzheimer’s and dementia.

A year ago, many of us in the long-term care field lamented that discussions about reforming U.S. health care had not at that point taken into account the needs of older, frail adults in particular.  This was despite the fact that long-term care represented one area where financing has been as uneven and haphazard as you can imagine.  

If anything needed “reform,” long-term care was it.

In the end, with the adoption of the late Senator Kennedy’s CLASS Act, we have at last taken a big step forward in developing a rational, national way to pay for it.

It will, unfortunately, take some time for this program to make a difference.  Once implemented and automatic enrollment begins, people will start paying a monthly long-term care insurance premium through payroll deduction.  Individuals must be in the program for five years, however, before they can tap into the per diem cash benefit when a functional disability develops.

Private long-term care insurance has been around for more than a decade and has failed to attract significant numbers of enrollees, partly because of premium costs, which can exceed $1,000 a month, and because of confusing arrays of coverage choices.  Estimates of premium costs for the new government program average $80-$100 a month, a much more attractive expense.  But, it’s still an additional expense for people.

Those who “opt out” of the new program will, unfortunately, be no better off than people are today when confronted with a long-term illness or disability and they lose the ability to do one or more of what are called “activities of daily living,” which include bathing, using the toilet and getting dressed.

A government-run program eliminates two of the biggest barriers that have existed in the open market for long-term care insurance – price point and easy access to a basic benefit.

It makes a great deal of sense.