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Senate Votes on Long-Term Care

Categories: Uncategorized
  1. December 6, 2009 at 11:38 pm

    Snuck or Stuck Into Health Reform; CLASS Act Will Cost Young For Decades

    Stuck in the middle of the Congressional and Senate health care plans is an easy-to-overlook proposal to establish Federal long-term care insurance.

    The proposed CLASS Act provisions sound so good and the legislation is so beautifully crafted that it will likely be overlooked in the final debate. And, to be fair and balanced, CLASS will be beneficial for a small segment of the nation’s millions of fairly affluent baby boomers who have no long-term care plan in place and are not able to health qualify for traditional long-term care insurance. That’s about 2 to 3 million at best.

    CLASS Act provisions will be financially ruinous for hundreds of millions of Americans currently in their 20s, 30s and 40s who will ultimately pay the cost of this new entitlement program for decades.

    This is simple to predict because the Federal government already has a voluntary long-term care insurance plan that is offered to federal employees (including Congressmen and women, Senators and even President Obama). It has been in place for several years. and of the estimated 13-18 million people eligible for this voluntary plan, less than 300,000 have ever signed up. We suspect President Obama is one who hasn’t (though we’d welcome being informed to the contrary).

    Who will sign up for CLASS? Those with the funds to pay the cost. While government actuaries project the cost will need to be in the range of $2,000 a year ($4,000 when a couple both apply), it’s clear few Americans will be willing to have their paychecks reduced by such a substantial amount.

    Thus, when CLASS is ultimately rolled out, it will need to be significantly under priced. Under pricing a plan that is highly attractive for those most likely to eventually claim benefit payments is a prescription for financial disaster.

    But Congress has anticipated that. No claims are to be paid for five years, which is an eternity in terms of an elected official’s life. Basically, they are kicking the can further down the road by which time footing the bill for the national long-term care entitlement plan will be borne by those currently in their 20s, 30s and 40s. Unlike seniors and aging baby boomers, there are no lobby groups advocating on their behalf (AARP is a strong supporter of CLASS).

    CLASS will likely sneak it’s way into the final health care reform. That will be regrettable for the future of our nation that will wake up years from now to discover the true cost. The need for a long-term care plan for the nation is necessary. This one, however, just isn’t the long-term solution — especially for those who will be left paying the bill for millions of baby boomers.

    Jesse Slome
    Executive Director
    American Association for Long-Term Care Insurance

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