Long-Term Care Program Debuts In New Health Law
It got precious little debate in either the House or Senate, and President Obama didn't even mention it when he signed the huge health bill into law. But buried within the new health care overhaul is the first-ever federal insurance program to help Americans meet the often crushing costs of long-term care.
The Community Living Assistance Services and Supports Act, better known as the CLASS Act, was one of the last legislative efforts of the late Sen. Edward Kennedy (D-MA). He added it to the health bill last summer as it was moving through the committee he chaired in the Senate. While some lawmakers questioned whether the program would, as promised, actually pay for itself, it remained in the measure to the end.
"Long-term care supports and services have been the forgotten element of people's health care needs," said Judy Feder, a senior fellow at the Center for American Progress and professor of public policy at Georgetown University. "People who need help with the daily tasks of living need medical care, and they need these daily supports. They don't distinguish between the two."
A Growing Population That Needs Care
The population that needs long-term care is large and growing. Currently, an estimated 10 million Americans have enough trouble performing so-called acts of daily living — things like bathing, dressing and eating — that they require assistance. The vast majority of that population lives in the community, not in nursing homes or other institutions.
Yet most people are woefully ill-prepared for the costs that accompany those needs — nonmedical costs that typically are not covered by Medicare or Medicaid.
That's where the CLASS Act comes in, says Nora Super, who directs federal government relations for the senior group AARP. "We find that the vast majority of people need long-term care assistance as they get older, but they don't save for it," she says. "So this will help people start saving for it in a very simple way, and help supplement their saving needs for the future."
While the CLASS Act is a voluntary program, it was designed to work like Social Security, with premiums to be deducted from workers' paychecks, unless they opt out. Enrollees become eligible for benefits after a five-year "vesting" period.
Benefits Will Vary Depending On Disability
The Department of Health and Human Services will determine the exact amount of premiums and benefits, and benefits will vary depending on the level of each person's disability. But benefits will be cash amounts that will be no less than $50 per day.
While that won't pay for a nursing home stay, which averaged more than $76,000 a year in 2008, "the benefit itself is not insignificant," says Al Schmitz, a principal and consulting actuary with the health care consulting firm Milliman. "Somebody getting $1,500 a month, that can still help with getting some home care, getting community assistance," he says.
But what does worry Schmitz is the possibility that the program might not live up to its promise of paying for itself. One worry is what actuaries like him call adverse selection.
"If the final premiums ... end up being too high, I think that has the potential to scare away healthy individuals and really only attract less healthy," he says. That would mean that there wouldn't be enough healthy people to help spread the risk, and premiums would get even higher still.
The Act Would Remain Solvent For At Least 75 Years
But Georgetown professor and long-term care expert Judy Feder says that doesn't worry her.
In making its estimate that the CLASS Act would remain solvent for at least 75 years, she said, the Congressional Budget Office used participation rates similar to those for private long-term care insurance, "which are very low, about 5 percent. And I think that's conservative. Because with a federally blessed, federally advertised program, there is a likelihood of higher participation rates from the get-go, which is what you need to make sure that healthy people are signing up."
The program is expected to launch next year. The next step is for the Department of Health and Human Services to determine the premiums and benefits, and start signing up employers to offer it.
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MARY LOUISE KELLY, host:
The new health care law expands more than just medical care. It also creates the first ever federal insurance plan to help Americans with long term care needs, pay for them. NPR's Julie Rovner reports.
JULIE ROVNER: Most people don't realize how expensive long term care is until they need it. And most people will need it.
Ms. NORA SUPER (Director of federal relations, AARP): We find that, you know, the vast majority of people need long term care assistance as they get older, but they don't save for it.
ROVNER: Nora Super is head of federal relations for the senior groups AARP. She says most people don't realize until it's too late, that they're not covered for things like the everyday help people need as they age. Things like dressing, bathing, and eating and preparing meals.
Ms. SUPER: Medicare does not cover any long-term care needs. Now, Medicaid does but only for people that spend down or, in other words, don't have the resources to cover their nursing home needs or their long terms care needs.
ROVNER: Which brings us to the new law known as the CLASS Act. It was one of the last legislative efforts of the late Senator Edward Kennedy. Judy Feder is a long time expert on long time care. She says the measure is a major achievement.
Ms. JUDY FEDER (Senior fellow, Center for American Progress): The CLASS Act is a phenomenal change in the landscape on long-term care because it establishes a federal long-term care insurance program.
ROVNER: Feder, a senior fellow at the Center for American Progress and professor at Georgetown University explains how the new law would work.
Ms. FEDER: The concept is that people start paying in when they're working and after theyve contributed for a period of five years, they become eligible for a benefit should they become impaired and need help.
ROVNER: And the program isn't just for the elderly, she says, but for anyone of any age who could become disabled.
Ms. FEDER: Bad things happen to anybody. I'm sure we all have friends or know of cases where a family has a disabled child, a pregnancy has difficulties, or a teenager has a diving accident.
ROVNER: So say you do sign up and end up needing long-term care, what do you get? Well, the benefit, estimated at about $50 to $75 a day, won't go far for those who need nursing home care. That can cost more than $75,000 a year.
But Al Schmitz, a principal with the health care consulting firm, Milliman, says for those trying to avoid a nursing home, it can make a real difference.
Mr. AL SCHMITZ (Principal and consulting actuary, Milliman): You know, $50 a day, somebody getting $1,500 a month, that can still, you know, help with getting some home care, getting people some community assistance that really provides a its still a significant benefit in my mind.
ROVNER: And how will you sign up? Well, the program is voluntary, but if your employer decides to offer it, youll be automatically enrolled unless you opt out. Schmitz agrees thats a good way to get people to participate. But hes worried about something else.
Mr. SCHMITZ: The concern is whether they're going to be able to attract employers to get them to offer this plan.
ROVNER: Employers might not want to take on the paperwork hassle. Schmitz says that leads him to another worry, whether the premiums and benefits will match up. Under the law, the new program has to raise enough money in premiums to cover all the benefits. It will be up to the Department of Health and Human Services to set those final levels.
Mr. SCHMITZ: If the final premiums that are determined end up being too high, that has the potential to, you know, scare away healthy individuals and really only attract those who are less healthy.
ROVNER: In other words, those most likely to need the care, which wouldnt create a large enough pool of healthy people to cover the benefits. But Judy Feder said shes confident that won't happen. She says the Congressional Budget Office estimated that the program would pay for itself over the next 75 years, and it based that estimate on participation rates for private long-term care insurance which only enrolls about five percent of the population.
Ms. FEDER: And I think that that's conservative, because with a federally blessed, federally advertised program, there is a likelihood of higher participation rates from the get-go - which is what you need to make sure that healthy people are signing up.
ROVNER: But Schmitz says maybe the most important thing about the new long-term care law is merely its existence. When it launches next year, he says, it should get more Americans thinking about their future long-term care needs.
Julie Rovner, NPR News, Washington.
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KELLY: Youre listening to MORNING EDITION from NPR News. Transcript provided by NPR, Copyright National Public Radio.
