LTC Bullet: CLASS Update

Thursday, August 26, 2010


LTC Comment: Too much on CLASS all at once to cover in detail, but here's a bibliographic essay to let you know what's available and where to find it, after the ***news.***

*** LTCI SALES UP 13% compared to first half of last year. Read "LIMRA: Individual LTC Sales Rebound" in National Underwriter. ***

*** HEALTH REFORM Costs, Benefits Explained in NCPA Consumer's Guide: The National Center for Policy Analysis's consumer's guide on the impact of the Patient Protection and Affordable Care Act answers questions about the coming changes and costs in Medicare, Medicaid, health insurance, employer coverage and income tax returns, says John C. Goodman, President, CEO and Kellye Wright Fellow of the NCPA... PRNEWSWIRE. ***

*** What the NCPA Consumer's Guide says about CLASS: "If you are healthy, you can probably get better insurance for less money elsewhere. Because the premium will be the same regardless of your expected costs, if you are healthy, you will pay higher premiums than are actuarially fair, while those who are more likely to need benefits due to chronic conditions or unhealthy habits will pay less. As a result, the program can be expected to disproportionately attract high-risk participants while low-risk individuals will likely opt out." ***

*** MEDICAID SPENDING GROWTH IS UNRELATED TO RECESSION. Huge increases in Medicaid spending during recessions are often justified as necessary counter-cyclical funding infusions. So, Medicaid spending should naturally go down during good economic times, right? Not so, says John R. Graham, Director of Health Care Studies at the Pacific Research Institute. Graham is my principal contact at PRI for our study of long-term care financing in California announced Tuesday in "LTC Bullet: Center Begins Study in California." ***



LTC Comment: Here's a rundown with links to the sources of the latest analysis and commentary about the CLASS Act. Listed in chronological order with the most recent items first.

Grace-Marie Turner of the Galen Institute ( had an op-ed in yesterday's Wall Street Journal titled "Putting the Brakes on ObamaCare." If it's gated on the WSJ site, read it here. Ms. Turner had this to say about CLASS:

"Dismantle it. To focus committee action and floor votes, Republicans can look for provisions in the law that Democrats are on record as opposing. For example, Senate Budget Committee Chairman Kent Conrad (D., N.D.) has said that the new federal program to fund long-term care-the Community Living Assistance Services and Supports Act, or CLASS Act-is 'a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.' Mr. Conrad and five of his Democratic colleagues sent a letter to Senate Majority Leader Harry Reid (D., Nev.) before the legislation passed opposing the program and expressing 'grave concerns' about its fiscal sustainability."

On August 18, Charles W. Boustany, Jr., M.D. (R, LA) published an op-ed in the Washington Examiner titled "The CLASS Act program fails to make the grade." You'll recall Congressman Boustany has introduced legislation to hold the CLASS Act accountable if it fails to deliver what it promises. After listing the CLASS Act's many actuarial and other flaws, he says in this article:

"In the face of all these concerns, why did Congress slip CLASS in the new law? The answer is simple. Premiums from CLASS provided Congress with a piggy bank to use to pay for other parts of their $1 trillion health-care overhaul. . . . The president neglected to mention these concerns in the flyer he mailed at tax-payer expense to 40 million seniors to 'educate' them about CLASS. . . . Independent experts prove CLASS falls short on so many fronts that we need to give it a failing grade. Our government currently borrows 41 cents of every dollar it spends, so we should stop adding new programs that are fiscally unsound. The CLASS program only kicks the debt can down the road for our children and grandchildren to pay."

Also on August 18, Kristen Gerencher had this to say about CLASS in a Wall Street Journal article titled "Consumer Health: Large Employers Recast Health Plans For 2011":

"[O]nly 3% of employers plan to offer a new voluntary benefit to offset future long-term-care costs starting next year, when the overhaul law first allows it. Two-thirds of employers surveyed said they won't offer it in 2011 while 30% are still reviewing the issue.

"The program would let workers divert a small amount of money from their paychecks into a trust fund that would provide a benefit of no less than $50 a day when they need it for home care, assisted living or nursing-home care. Employees must contribute to the fund for at least five years and meet certain health criteria to be eligible for benefits.

"But so far large employers don't appear to be impressed. 'It's not much of a benefit for the employee,' Darling said.

"Kaplan [a health practice consultant] confirmed a lack of interest among his clients as well, many of whom are struggling to keep the benefits they have as opposed to adding new ones, he said.

"'The benefit's not big enough,' he said of the long-term-care program."

On August 17, Ed Feulner, president of the Heritage Foundation ( published a piece titled "Go to the Back of the CLASS" on He says:

"CLASS is structurally unsound because it requires identical premiums for individuals of the same age, regardless of health status. Healthy people will thus be charged an unfair amount, making them unlikely to enroll. Sick people, meanwhile, are more likely to enroll. . . . Actuaries who have analyzed CLASS believe that premiums will be insufficient to fund benefits. This raises the possibility that CLASS will put taxpayers on the hook for a bailout of this program and/or beneficiaries will receive less than they were promised."

Lest you think no one has anything good to say about CLASS, here's a source--also published August 17--with seven articles, not one of which has anything bad to say about the program. This special issue of the Public Policy & Aging Report, titled "Bringing CLASS to Long-Term Care," was sponsored by the SCAN Foundation. It is an unabashed paean to the CLASS Act. Editor Robert B. Hudson writes:

"In an enormously important yet widely unrecognized development, passage of President Obama's health care reform legislation included major provisions centered on long-term care, including the Community Living Assistance Services and Supports program (the CLASS Act). . . . There are significant limits to the program that may be seen as rendering the CLASS Act 'social insurance light,' but to see public long-term care insurance come into existence against all odds is a stunning occurrence in its own right."

"[A]rticles by Lisa Shugarman (from The SCAN Foundation), Joshua Wiener (RTI International), Walter Dawson (Oxford University), Barbara Manard (American Association of Homes and Services for the Aging), Anne Tumlinson and colleagues (Avalere Health), Rhonda Richards (AARP), and Kathryn Roberts (Ecumen) recount the laborious process that led to realization of the long-term care provisions found in ACA [Affordable Care Act, AKA "health reform," AKA "ObamaCare"], analyze the key provisions of the legislation, and explore hurdles that are certain to be encountered during program implementation."

Finally, there is this from back on June 8, 2010 by Kimberly Lankford of Kiplinger's Money Power writing in the Washington Examiner: "Retirement: Long-term care that falls short." She says:

"[D]on't give up a long-term care policy you already own or decide not to buy one because you think you'll have enough coverage from the federal plan. For most people, this CLASS Act barely gets a passing grade."

LTC Comment: OK, that's the latest on CLASS. Use this information to open doors, warn employers and their employees about the pitfalls of this fatally flawed federal program, and show them actuarially sound, contractually backed, private insurance alternatives.

The CLASS content covered in this LTC Bullet has been added to our Members-Only Zone website here:, exclusive for Center members. Not a member yet (you should be if you’re receiving this)? Need to renew? Need a refresher on your username and password? No problem. Just contact Damon at 206-283-7036 or Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning.