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A Kennedy Vision, Long-Term Care Program Gets Boost from Obama

By Jane Norman, CQ HealthBeat Associate Editor

Feb. 26, 2010 -- Amid all the talk about a "government takeover" of health care, one proposal that would substantially expand the federal role in the system has remained at the periphery of the debate.

The plan would put the government in the business of providing long-term care insurance to people through their employers. While the idea hasn't drawn the same attention as issues like the public insurance option, it does inspire passion from its critics and supporters. One side calls it an unsustainable drag on the federal budget while the other says it's a badly needed helping hand to encourage seniors and people with disabilities to remain independent.

Republicans tried to strip the proposal from the health care overhaul when the bill was on the Senate floor. Now President Obama has given the idea a boost. He cited it in his Feb. 22 health care outline as a policy improvement that should be included and even strengthened. While White House officials didn't comment on exactly what they'd like, aides to the Senate Health, Education, Labor and Pensions Committee said their understanding is the administration backs the version in the Senate bill (HR 3590).

The proposal, which supporters call the Community Living Assistance Services and Supports (CLASS) Act, is helped by the fact that it was the vision of the late Sen. Edward M. Kennedy of Massachusetts, longtime HELP chairman. Kennedy proposed the measure last year even as his own health was failing, and it was picked up by the new chairman, Iowa Democrat Tom Harkin.

The idea stems from the premise that people often don't want to think about long-term care, or choose to believe they'll never need it. But with growing numbers of baby-boomers nearing retirement age, there's a very real prospect that many eventually will require help with the ordinary daily activities like eating or bathing. Or those who can no longer handle living in their homes may need to move to assisted living facilities or nursing homes.

Yet few prepare. There are now 6 to 7 million long-term care insurance policies held in the private market, but growth has slowed in recent years, and less than 10 percent of people 50 or older have policies, according to the Congressional Research Service.

The long-term care program would be offered by participating employers to workers automatically, though employees could choose to opt out. There would be no underwriting, which means no one could be excluded for a pre-existing condition. Participants would not be eligible for benefits until five years after enrolling, and the benefit would be at least $50 a day. A House version would allow non-working spouses of workers to also sign up.

Sparring Over Cost
The program has drawn support from some 275 advocacy groups. People like Mary Margaret Moore of Salem, Mass., executive director of the Independent Living Center of the North Shore and Cape Ann, Inc., are pushing hard. The program would ship cash directly to beneficiaries who might need to pay for help with dressing in preparation for work and remain self-supporting, she said.

Critics say the problem is in the structure and the cost of premiums. The Congressional Budget Office estimated that average monthly premiums under the Senate bill would be $123. That's calculated to be adequate to keep the program solvent for 75 years. However, actuaries for the Centers for Medicare and Medicaid Services estimate premiums at a much steeper $240 a month. They say the program faces "a significant risk of failure" because those most likely to enroll would be people with health problems or those who anticipate them. A task force made up of actuaries concluded that the premiums will be unaffordable for most Americans and not enough would participate, suggesting the program might eventually need to be bailed out. The intended benefit of $50 a day is too low and inevitably would have to be increased, they said.

Critics also question the financing of the program, saying that premiums collected up front would help finance the overhaul. The CLASS Act is estimated by CBO to save the government $72 billion from 2010 through 2019, largely because of the five-year delay in paying out any benefits, but after 2029 it would begin to increase deficits, according to CBO. Democrats respond that a Republican amendment accepted by the HELP committee would require that only premiums be used to sustain the program.

Scott Harrington, a professor of health-care management and insurance and risk management at the University of Pennsylvania's Wharton School, said the government should pursue other options such as creating more tax breaks for purchase of private long-term care insurance. Even in the private market, "this is a very difficult market to insure," he said.

Advocates of long-term care say that somehow, though, the problem needs to be addressed.

"I don't think the culture understands how difficult it is to keep on working and providing when we have a disability, and we do need some help," said Moore.

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