Back to square one with end of federal long-term care policy

Published in The News Tribune, October 25, 2011

With little fanfare, a Class Act died earlier this month.

Formally known as Community Living Assistance Services and Supports, Class Act was a short-lived health care program created as part of the recent health care overhaul.  The Obama Administration has just now cancelled it.

Class Act’s demise is noteworthy — certainly much more than would be indicated by its placement on the back pages of the newspapers.   Its end helps remind us of a present and growing problem we have yet to solve.   It also reminds us of the inadequacies in current health care policy.

Class Act was a federally-administered voluntary insurance program that allowed citizens to buy coverage for their possible long-term health care needs.  Workers who signed up would have had premiums taken out of their paychecks in exchange for insurance covering some costs associated with future nursing home and assisted-care living expenses.

Class Act was an attempt to fill an important hole in our health care system.   Very few Americans have insurance that covers the day-to-day basic care associated with long-term chronic health problems such as dementia, mental frailty, failing limbs or organs, or just old age.  Medicare doesn’t cover much.  Nor do most private health insurance policies.

Class Act’s demise reminds us of our vulnerably to the large and growing financial risks of needing long-term care.  Of those who reach the age of retirement, almost three out of four will need some form of expensive long-term or assisted care.  Nursing homes cost the typical retiree about two to three times their annual income; it’s not unusual to go through a half million dollars on nursing care over the final years of one’s life.  Many seniors blow through their retirement nest egg in record time, and spend their final years as dependents of the state.

In fact half of all dollars spent on long term care in the nation is paid by Medicaid.  And since qualifying for Medicaid requires you to have first spent down your assets, Medicaid’s share of expenditures are all made on behalf of poor senior citizens.

Long-term care is costly for children of the elderly as well.  Not just the financial cost of helping mom or dad pay for their final years, but also the emotional costs associated with decision-making with price tags attached.  With the number of elderly in our country expected to double over the next 40 years, it’s easy to see how this potentially devastating problem will only get worse.

The odd thing here is that there’s no doubt that as a nation we can afford our citizens’ long-term care needs.  Each year only about two cents out of each dollar we spend is on long-term care.  The problem is when very large expenses fall on a few.  That is what’s unaffordable.

So why did Class Act fail?  It failed because it was optional – the same reason that explains why long-term care also fails in the private sector.

When insurance is optional, those who expect to need it the most are the ones lining up to buy it.  The others stay home.  And if premiums are based on what the average citizen will draw in benefits, expenses will exceed these premiums by a long shot.  This is what happened with Class Act.  “We have not identified a way to make Class work at this time,” Obama’s Secretary of Health and Human Services Kathleen Sebelius, sadly concluded as she pulled its plug.

There is a dire need for affordable protection against the costs of long-term care in our country.  But this need will remain an unfulfilled one until we agree that it is our collective responsibility to pay for the costs of an increasingly large and long-lived elderly population.

Leaving so many of our elderly citizens to live their final years in poverty because of a lack of insurance is surely not what any of us would consider a class act.