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CLASS Act Repealed

In 2011, 13 percent of Americans were over 65 years old.  In the coming years, this number will only increase.  Unsurprisingly, the demand for long-term care will also increase. Currently, spending on long-term care in Medicaid only was over $50 billion in 2009.

One option for increasing the affordability of the long-term care market is to have the government and stabalize the long-term care insurance market.  Currently, the market for long-term care insurance is small because of a signficant amount of adverse selection; individuals unlikely to need LTC don’t buy LTC insurance.

Ted Kennedy’s CLASS Act would have created a voluntary and public long-term care insurance option.  Under the CLASS Act:

  • Enrollees would have paid a monthly premium, through payroll deduction
  • Enrollees would have been covered on a guaranteed-issue basis
  • Enrollees would have been eligible for benefits after paying premiums for five years and having worked at least three of those years
  • Enrollees would have received a lifetime cash benefit after meeting benefit eligibility criteria, based on the degree of impairment [5]

The CLASS Act, however, was not to be.  By a vote of 267-159, lawmakers passed H.R. 1173, Fiscal Responsibility and Retirement Security Act of 2011, which repealed the CLASS Act.

The CLASS Act, a pet project of the late Sen. Ted Kennedy, is a voluntary program where taxpayers could volunteer to pay premiums for long-term care that would allow the taxpayer to get that cash later in life.

Health and Human Services Secretary Kathleen Sebelius wrote a letter to Congress Oct. 14 explaining that a 19-month ‘comprehensive analysis’ of the CLASS program indicated that it was not viable.

The measure, formally known as the Community Living Assistance Services and Supports Act, came with a five-year waiting period before it started to pay out benefits, but it started collecting revenues immediately. Republicans argued that the act was just another example of how the administration hid the cost of the Affordable Care Act.

1 Comment

  1. Not quite, Jason. The house voting to repeal something still means it must pass the Senate and receive the President’s signature.

    The ABC article you linked to says as much: “Boehner called on the Senate to ‘follow the House’s lead, scrap the law, and work with us to enact reforms that will actually lower health care costs without hurting small businesses and jeopardizing coverage for families.'”

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