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Obama Administration Halts Implementation of Health Law's Long-Term Care Program

By Emily Ethridge, CQ Staff

October 14, 2011 -- The Obama administration will stop implementation of a controversial long-term care program included in last year's health care overhaul after determining they cannot find a way to make it fiscally sound and still meet the law's requirements.

Health and Human Services Secretary Kathleen Sebelius said after 19 months of work, her department was unable to find a way to structure a voluntary, self-financing, long-term care program that would be sustainable over 75 years, as the law requires.

"Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time," she said in letters to congressional leaders that accompanied a full report on the program, a central feature of the health care law (PL 111-148, PL 111-152).

Republicans cheered the announcement, saying it acknowledged their long-held skepticism over the program's viability. Last month, a bicameral Republican working group issued a report citing evidence the administration had concerns over the Community Living Assistance Service and Supports (CLASS) Act even before Congress passed the health care law.

"After ignoring repeated warnings from my Republican colleagues and me about the fiscal solvency of the CLASS Act, the Obama administration jammed Obamacare through Congress in order to score a political win," Sen. John Thune, R-S.D., said.

The late Sen. Edward M. Kennedy, D-Mass., pushed for the program to help bridge the coverage gap for long-term care between Medicaid and more expensive private plans. And the program came with a benefit: The Congressional Budget Office scored it as saving $70.2 billion over 10 years because the program would collect premiums for five years before paying for the long-term care.

Republicans were highly critical of the accounting, denouncing it as a budget gimmick used to improve the health care overhaul's overall budget score.

"The overriding reason the CLASS Act was included in the 2010 health care law was the accounting gimmick it enabled, so that supporters could say the law was paid for and even saved money," said Sen. Charles E. Grassley, R-Iowa.

Skepticism over the program's sustainability lead lawmakers to include a requirement in the law that the HHS secretary certify to Congress that the program could be implemented in a fiscally sound manner over 75 years.

The problem, HHS Assistant Secretary for Aging Kathy Greenlee said, comes in crafting a program that meets all those requirements: voluntary, completely self-financing, and also certifiably, fiscally sound.

"Everything we do to make the program more sound moves us away from the natural reading of the law, and thus increases the legal risk to implement the program," said Greenlee in announcing the administration's decision. "And this has lead us to the conclusion that we can't move forward at this point."

Greenlee said the health care law will still reduce the deficit by $127 billion between 2012 and 2021, even if, as expected, President Obama strikes the CLASS Act from his 2013 budget proposal, thus losing the program's scored savings.

Sebelius conceded in her letter to Congress that the agency has not been able to identify any plan that could be consistent with all those requirements. Still, she said she hoped the information gathered could be used to develop other affordable and sustainable long-term care options.

Administration officials emphasized that some kind of long-term care solution still needs to be created.

"Without insurance coverage or the personal wealth to pay large sums in their later years, more Americans with disabilities will rely on Medicaid services once their assets are depleted, putting further strain on state and federal budgets," Sebelius said in her letter.

Senate Health, Education, Labor and Pensions Committee Tom Harkin, D-Iowa, who has advocated for better long-term care options and helped push the CLASS Act, agreed.

"Our office is taking time to review the report from HHS, but does appreciate the work the secretary and her team have done in examining this program," a Harkin spokeswoman said. "The fact is that we still have a long-term care problem in this country and despite the criticism received, the CLASS program was a creative attempt to address a difficult and growing challenge for American families."

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