LTC Bullet:  CLASS vs. LTC Partnerships:  Allies, Adversaries or Co-Dependents? 

Tuesday, February 15, 2011 

Miami, Florida-- 

LTC Comment:  The father of the LTC Partnerships compares and contrasts them with CLASS after the ***news.*** 

*** WHILE WE'VE BEEN AWAY:  here's some of the news we would have covered if we'd been on the job.  Back at you full bore next week. *** 

*** 2/13/11, New York Times: Quote:  "Governors and mayors facing large deficits have set their sights on a relatively new target - the soaring expense of health benefits for millions of retired state and local workers."
LTC Comment
:  Every piece of news like this sends the message explicitly and subliminally to the public that each and every one of us will be more personally responsible for our own health and LTC costs in the future.  It will be gradual, but demand for LTCI will increase dramatically. 

*** ANOTHER ONE BITES THE DUST:  2/7/11, National Underwriter:  Quote:  "Guardian had a small presence in the LTC insurance market to ensure that its financial representatives had a comprehensive portfolio of products to address the changing needs of their clients, says Gordon Dinsmore, president of Berkshire Life, Pittsfield, Mass. Its decision to leave the market was made after an extensive review of the business and decided to focus on its core life and disability income insurance business, he said."
LTC Comment
:  So, we trust, all Guardian agents will be encouraged to refer future LTCI business to representatives of the remaining carriers to ensure ongoing "comprehensive" protection for their clients. *** 

*** SECRETARY SEBELIUS says she can fix CLASS NCOA agrees The Heritage Foundation strongly disagrees.  Read these three articles and see what you think.  As for me, I believe CLASS is about as fixable as alterations can be made to the "Emperor's New Clothes." *** 

*** LTCI PRICE INDEX:  2/7/11,  Quote:  "A 55-year-old couple purchasing long-term care insurance protection can expect to pay $2,350-per-year (combined) for about $338,000 of current benefits ($169,000 each) which will grow to about $800,000 of combined coverage for the couple when they turn age 80.  The data comes from the 2011 Long-Term Care Insurance Price Index published by the American Association for Long-Term Care Insurance ( that analyzed rates for 11 long-term care insurance policies. According to the Association report, a 55-year old single individual pays $1,480 annually for comparable coverage. If the 55-year-old couple did not qualify for preferred health discounts, their cost would increase by $325 annually." *** 

*** 2/4/11, McKnight's LTC News:  Quote:  "The Centers for Medicare & Medicaid Services has proposed a new rule that would require an expanded class of providers and suppliers of Medicare services to alert beneficiaries to the existence of quality improvement organizations (QIOs). Previously, only hospitals and select others had been obligated to do so."
LTC Comment
:  Ironic.  People with LTC insurance don't have to ask permission to complain about poor care.  They simply move to a better facility. 

*** 2/3/11, Wall Street Journal, "House GOP Weighs Medicare Limits"  Quote:  "Asked about various options for dealing with the federal deficit, 74% of respondents said it would be acceptable to make Medicare more needs-based, so that low-income seniors received larger subsidies than higher-income seniors. Some 64% approved of capping payment increases to doctors and hospitals."
LTC Comment
:  Further evidence most Medicare cuts will take the form of means-testing the program or cutting provider reimbursements rather than raising premiums (payroll deductions) or cutting benefits.  This means middle-class and affluent Medicare beneficiaries will be more on the hook than ever for acute, as well as, LTC health costs. *** 



LTC Comment:  I first heard about the LTC Partnership idea when it was little more than a gleam in Dr. Mark Meiners' eye.  In the mid-1980s he agreed with me that easy access to Medicaid LTC benefits could crowd out a market for LTC insurance.  But Mark argued that my solution--tightening eligibility, mandating estate recoveries, putting a stop to Medicaid planning, and targeting Medicaid to people in need--wouldn't work.  Rather, he said we needed a kinder and gentler approach, a carrot instead of a stick, something more politically palatable.  So Mark Meiners came up with the LTC Partnership idea and the rest is history--a very bumpy ride for many years but steadier success lately. 

Today we are fortunate to have an excellent and brief monograph by Dr. Meiners that explains the similarities, differences, and potential coordination of the CLASS and LTC Partnership programs.  Read some excerpts below and the article in full here.   

My only criticism is that the piece goes pretty easy on CLASS.  That Ponzi scheme's vulnerability to adverse selection and likely rapid actuarial insolvency gets little more than a mention.  Its phony $70 billion "savings" by double counting unspent reserves as "near-term budget offset and as long-term savings" (per Howe and Jackson) is not mentioned at all.  For an excellent critique of CLASS, see Neil Howe and Richard Jackson, The Other New Health Entitlement, Facing Facts Quarterly:  A Report about Entitlements & the Budget from The Concord Coalition, Volume V, Number 3, New Series, December 2009. 


Excerpts from Mark R. Meiners, PhD, "Connecting the Long-Term Care Partnership and CLASS Act Insurance Programs," Center for Health Care Strategies, Inc., George Mason University, February 2011,

"Deep within the Patient Protection and Affordable Care Act, the Community Living Assistance Services and Supports provision, known as the CLASS Act, establishes a first-ever publicly sponsored, voluntary long-term care insurance option for all working adults. State Long-Term Care Partnership programs, as the original public-private long-term care insurance strategy, and the CLASS insurance option share the common goal of helping consumers prepare for the risk of catastrophic long-term care costs. 

"This policy brief is designed to help the 40 states with existing Long-Term Care Partnership programs to inform consumers and other stakeholders in considering these two different approaches to insure against long-term care risk. The brief compares the two programs in a variety of areas, including program benefits, eligibility, affordability, intersections with Medicaid, and the need for supplementary products."  (p. 1) 

"State Long-Term Care Partnership programs, the original public-private long-term care insurance strategy, and the new CLASS insurance program share the public policy goal of helping consumers prepare for the risk of catastrophic long term care costs."  (p. 1) 

"Both the CLASS and Partnership programs are designed to address risk pooling and affordability issues in long-term care insurance that would otherwise limit the reach of the private market." (p. 1) 

"Both Partnership and CLASS seek to keep premiums affordable within their respective designs." (p. 2) 

"While CLASS offers a simple 'one-size-fits-all' benefits approach, Partnership insurance offers a wide array of options that can be tailored to provide substantial daily benefits at an affordable premium." (p. 2) 

"Most Americans will be eligible for either CLASS or the Partnership, but eligibility absent affordability is meaningless to the average consumer." (p. 3) 

"CLASS is designed to keep premiums low by offering a limited benefit ($50-100 per day), minimizing administrative expenses (3% compared to 30 to 40% in the private market), and substantially expanding the risk pool, especially with large numbers of healthy younger workers. As noted earlier, this last goal is shared by Partnership insurance, so success is predicated on the appeal and credibility of the CLASS option compared to private insurance offerings." (p. 3) 

"In contrast to the CLASS 'long and lean' benefit structure, Partnership favors a 'short and fat' benefit structure." (p. 4) 

"The limited cash benefit and one-size-fits-all approach of CLASS along with the flexibility of Partnership insurance suggest the potential for private wrap-around products to fill gaps in the CLASS benefit." (p. 4) 

"The feasibility of a private supplemental market emerging to fill gaps in CLASS coverage largely depends on the affordability of CLASS." (p. 4) 

"Several other program features may make Partnership coverage more appealing to eligible individuals. For example, spousal discounts are typical with Partnership insurance, but are not available with CLASS. Indeed, a spouse is not eligible for CLASS, if she/he does not meet the program's employment rules." (p. 5) 

"Individuals who are currently insurable may not want to wait for the CLASS option per the reasons outlined above. Partnership states have been working to help their citizens understand the considerations in choosing a good private insurance policy." (p. 5) 

"Both CLASS and Partnership insurance are designed to relieve stress on Medicaid budgets by helping people prepare for potential long-term care needs. The two programs offer very different models of coverage that will be tested in the marketplace." (p. 5) 

"Both CLASS and Partnership programs will have to convince the public, without any historical proof, that the products are accurately priced." (p. 5) 

"As the DHHS develops CLASS, it will need to address numerous consumer protection issues including premium waivers while in benefit, protection against the risk of policy lapse, and provisions regarding renewability. Even CLASS' strongest supporters acknowledge that the law may need some modifications to be successful. The work of the Partnership states and the lessons learned from the private long-term care market provide a wealth of experience that can help improve both programs for consumers." (p. 5, footnote omitted) 


*** THE CLASS CONTENT covered in today's 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. ***