Group shares ‘grave concerns’ over CLASS program for long-term care insurance
Leaders of a National Conference of Insurance Legislators committee are expressing “grave concerns” over the new federal long-term care insurance program created by the federal health care reform law.
In a letter to U.S. Health and Human Services Secretary Kathleen Sebelius, state Rep. Barb Byrum of Michigan and state Sen. Jake Corman of Pennsylvania say the new government-run Community Living Assistance Services and Supports (CLASS) program “fails to apply the principles of risk management that are essential to any financially sound insurance program.”
Sebelius has signaled that the federal government won’t launch the CLASS program until its financial stability can be assured. Several members of Congress have called for the CLASS program to be eliminated.
CLASS is a voluntary, federally administered insurance program that was authorized under the federal health care reform law. It won’t be operating until the fall of 2012 or later.
The program is designed to help people pay for long-term care needs — such as nursing home care, in-home care or adult day care — if they’re disabled early in life or need assistance later in life. Premiums would be paid voluntarily by employed Americans through payroll deductions when they’re healthy; cash benefits of at least $50 a day could be tapped when participants require long-term care services.
By 2030 or so, the CLASS program could begin racking up a deficit in the billions of dollars, according to the Congressional Budget Office.
The National Conference of State Legislators says the CLASS program risks paying more in benefits than it collects in premiums. That, the group says, would drive up rates and keep young, healthy consumers from participating in the program. Furthermore, the group says, the CLASS program offers little incentive for insurance agents, insurance brokers and human resources professionals to encourage enrollment.
The National Conference of State Legislators is an organization of state lawmakers who focus on insurance legislation and regulation.