Government insurance for long-term care likely to slip into final healthcare bill

By James Oliphant

Dec. 31, 2009 12 AM PT

Reporting from Washington — A government insurance plan to provide in-home assistance to the elderly and disabled is poised to become law despite a majority of senators voting against including the proposal in the healthcare overhaul bill.

The so-called CLASS plan would allow workers to sign up for a payroll deduction program similar to Social Security. Participation would be voluntary, with fees and benefits to be determined by the age of the participant.

The fees would be expected to cover most of the current cost of the program.

Despite widespread concern about the potential impact on the federal deficit, the plan survived in the Senate bill passed this month. Although an amendment to delete it attracted majority support, it fell short of the 60 votes needed to overcome a threatened GOP filibuster. The plan was approved by the House in its healthcare bill.

Now its fate depends on the congressional leaders who must reconcile the varied provisions of the two bills.

The plan is getting strong support from groups representing seniors and the disabled -- two potent lobbies.

“It’s one of the few transformational things in the healthcare bill,” said Larry Minnix, chief executive of the American Assn. of Homes and Services for the Aging, a Washington advocacy group. “It gives everybody the opportunity to begin to plan for an eventuality everybody will face.”

Only those who are employed could pay into the plan, and participants would have to wait at least five years before they could receive benefits. One advantage of the program is that it would accept those with preexisting conditions, something private insurers balk at.

“By the time you know you need long-term care,” Minnix said, “it’s often too late and too expensive.”

The plan, he added, would help ease the strain on the Medicaid program, which currently covers much of the cost of caring for the disabled and elderly.

The measure’s survival is a product of timing, good luck -- and the continuing influence of the late Sen. Edward M. Kennedy (D-Mass.), who had long championed such a program.

But critics contend it creates a new government entitlement program that could overwhelm the already beleaguered federal coffers. They say fewer people are likely to pay into the system than projected, resulting in benefits outpacing revenues.

“The program simply is not viable,” said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, an insurance-industry trade group that opposes the measure.

Zirkelbach and other critics point to a study conducted by the nonpartisan Centers for Medicare & Medicaid Services, which suggests that the program will stop paying for itself by 2025.

A Senate requirement that the program be self-sustainable means that premiums will have be set high enough to cover the cost of the benefits, which are likely to be as high as $75 a day. Premiums could run as high as $240 a month, according to the study, an amount that could discourage many younger, healthier people from signing up.

With fewer young workers participating, premiums could go even higher and cause the program to enter a “death spiral,” the study argued.

“Premiums are going to be exceptionally high,” said Steve Schoonveld of the American Academy of Actuaries.

Congress, he said, “has to decide if this is a social program or an insurance program and not somewhere in between.”

The nonpartisan Congressional Budget Office is more optimistic, projecting cheaper premiums and forecasting that the program is likely to remain fiscally solvent over a 75-year period.

And while a benefit of $50 to $75 a day may not sound like much, Minnix said it could make the difference between being able to stay with a family member and being sent to a nursing home or assisted-living facility.

“You live with your daughter. Your daughter has to work. What does $75 a day buy?” he said. “It all of the sudden buys you someone to come in and stay with you six to eight hours a day while she works.”

That the CLASS program survived at all in the Senate is something of a surprise. It was part of the bill drafted by the Senate Health Committee, once run by Kennedy, and was opposed by a core group of influential Democratic moderates, including Sens. Max Baucus of Montana, Kent Conrad of North Dakota and Ben Nelson of Nebraska.

But unlike the more high-profile and controversial plan to create a government-run health insurance program, no single senator drew a line in the sand and hinged his vote on excising the program from the bill.

Senate Majority Leader Harry Reid (D-Nev.) included the plan in the final bill, requiring 60 votes on the Senate floor to strip it out. Eleven Democrats and all 40 Republicans voted in early December to do just that but fell nine votes short of the required supermajority.

House and Senate leaders who meet next month to merge the two bills are expected to wrangle over funding for the overall healthcare bill, restrictions on abortion coverage and other contentious issues.

That makes it more likely that the relatively obscure CLASS act will again pass under the radar and make the final cut.

[email protected]