December 2009 Archives

The Washington Post came out against the CLASS Act today. In an editorial,The Post wrote this about the proposed national long-term care insurance program:

"There are already enough risks and uncertainties in health reform. Long-term care is an important topic, but it is one that deserves more careful scrutiny than has taken place in the context of the broader health-reform debate."

This editorial is very disappointing. While it rehashed many of the concerns that I and others have raised about premium costs and the number of people likely to participate in the voluntary insurance program, it copped out. Rather than suggesting ways to improve CLASS,  it merely suggested Congress abandon the effort and come back to it another time. Well, thanks.

The Post also failed to note that, despite the flaws of CLASS, allowing people to buy insurance to help cover their long-term care costs would be a vast improvement over the status quo, where middle-class people spend all of their financial assets and then go onto to the welfare-like Medicaid program.  

It would have been far more constructive if The Post could have joined me and others and proposed an alternative. Just saying no at this point in the debate is not helpful to those needing care or those of us caring for our parents. 

The CLASS Act, the proposed national long-term care insurance program, is included in the latest compromise health bill introduced today by Senate Majority Leader Harry Reid (D-Nev.). This version of the bill has now been endorsed by all 60 Senate Democrats, including several, such as Nebraska's Ben Nelson, who had previously vowed to oppose the health measure if it included CLASS.

Another critic, Senate Budget Committee Chair Kent Conrad (D-N.D.), said he was now satisfied the latest version of CLASS would resolve his concerns that CLASS premiums would be used to pay for other provisions of the health bill.

I have not yet seen a copy of Reid's 500-page amendment to the health bill, so don't have any details. But it looks as if CLASS will make it to the next step--a House-Senate conference to resolve the many differences in the overall health bills. Reid hopes the Senate will formally approve his compromise before the Christmas holiday break.     

The politics of the CLASS Act, the proposed voluntary government long-term care insurance program, are getting nastier. Critics have taken to calling it a Ponzi scheme, comparing it to Bernie Madoff, and ripping it as a massive new unfunded government spending program. Senator Joe Lieberman (I-Conn) called it "a whole new entitlement program" which it certainly is not.

I've raised concerns with CLASS myself. And it is true that it could eventually become a new unfunded entitlement. But it is not now, and the danger that it would become one lies with  future congresses, and not with CLASS itself. 

The point, though, is that conservative critics of CLASS are missing a huge opportunity. Instead of trashing CLASS, they ought to be trying to fix it. 

Properly designed, CLASS can be a be a huge benefit to the frail elderly, adults with disabilities, and their families. Deficit hawks worry that the government would spend hundeds of billions of dollars to provide long-term care if CLASS passes. What they forget is that Medicaid already spends more than $100 billion a year on this care, and as the Baby Boomers age, that amount will explode.  

It is far better to replace most of those welfare-like Medicaid benefits with a self-funded insurance program whose reserves are fully insulated from the rest of the budget. Doing that would take some tinkering, but there is nothing in the basic structure of CLASS that precludes such adjustments. 

CLASS is a huge opportunity for deficit hawks.  It would be a real shame if they blow it.    

When I was caring for my parents, I thought what I was doing was both the hardest thing I had ever done and the most rewarding. Now, an important new study suggests I was not alone.

The study, called Caregiving in the U.S., is an important snapshot of what life is like for those providing assistance to aging parents, as well as young adults and children with disabilities. The study concludes that a staggering 65 million Americans are providing some assistance to their loved ones. About 17 million are caring for special needs children. The rest--nearly 50 million-- are helping the frail elderly or adults with disabilities.  

Who are these caregivers? Keep this picture in your mind: A 48-year old woman caring for her elderly mother. She is trying to hold down a job even as she spends about 20 hours a week helping her mom, something she's been doing for four years. There is a good chance she is taking time off work to help her mother with transportation, shopping, managing finances, taking medications, and even getting in and out of bed. 

She is getting help when she can from other family members and friends. About 40 percent rely on paid aides for some help, although that's significantly fewer than in 2004, the last time the survey was done. And about 40 percent feel their caregiving puts a "high burden" on them. 

Among those caring for someone 50 and older, the picture is a bit different. Caregivers are older--more than half are over 50 themselves. They are, typically, helping a 77-year-old widow who is living in her own home and who may be suffering from dementia.

The study was done by the National Alliance for Caregiving along with AARP, and funded by the MetLife Foundation. It follows similar studies published in 1997 and 2004. Read it.        

The CLASS Act, a proposal to create a national long-term care insurance system, remains alive in the Senate health bill, but its fate remains far from certain. 

On Friday, the Senate actually voted 51-47 to drop the plan from its health bill. But, thanks to Senate rules that required 60 votes to approve the change, CLASS remains in the measure. Most troubling, Senate Finance Committee Chairman Max Baucus and 10 other Democrats voted to kill CLASS. One, Sen. Ben Nelson (D-Neb) says he will oppose any health bill that includes the insurance plan.

Several senators oppose CLASS because, they say, it would become a long-term drain on the Treasury. In a November 25 report, the Congressional Budget Office laid out its concerns about the long-run budget consequences of CLASS. It is a complicated document, but, in brief, its says CLASS would build up huge surpluses in the short-run and then gradually spend both premiums and investment earnings in future years. This would be fine in a responsibly-run program. 

But many fear is that there is little in CLASS that would stop future congresses from spending those reserves on other priorities rather than allowing them to build up as they should.  

On Saturday, the Senate passed a non-binding resolution saying that CLASS premiums will be reserved to pay insurance claims and not spent on other government programs. This is exactly what should happen. But, sad to say, a sense of the Senate resolution promising fiscal responsibility is not worth the paper it is printed on.

I hope lawmakers can find a way to create a true reserve fund for CLASS premiums and investments. It would probably have to establish some sort of quasi-private entity outside of Treasury to do this. Otherwise, CLASS risks suffering the same fate as Social Security. That would be a disaster both for our parents and for those of us caring for our parents.