Sebelius On The CLASS Act: ‘I Do Not See A Viable Path Forward’

The Obama administration has decided to halt plans to implement the long-term care program in the 2010 health care law after determining that financing mechanisms were not sufficient.  

The New York Times: Health Law To Be Revised By Ending A Program
The Obama administration announced Friday that it was scrapping a long-term care insurance program created by the new health care law because it was too costly and would not work. Kathleen Sebelius, the secretary of health and human services, said she had concluded that premiums would be so high that few healthy people would sign up (Pear, 10/14). 

The Washington Post: White House Eliminates Insurance Program For Long-Term Care
Known as the Community Living Assistance Services (CLASS) Act, the program was intended to be purely voluntary and open to all working Americans. It would have provided a basic lifetime benefit of a least $50 a day in the event of illness or disability, to be used to pay for even nonmedical needs, such as making a house wheelchair-accessible or hiring a home caregiver to assist with basic tasks. The program was to be entirely self-financed with the premiums participants paid (Aizenman, 10/14).

The Hill: Nixing Of Health Law's 'Unsustainable' CLASS Act Prompts GOP Inquiry
House Republicans announced late Friday that they will be holding a hearing to find out why it took so long for the Obama administration to nix the health law's long-term care CLASS Act. The hearing by the Energy and Commerce Committee's health and oversight panels has been scheduled for Oct. 26. ... "Make no mistake," Chairman Fred Upton (R-Mich.) said in announcing the hearing, "the CLASS program was tucked into the health care law to provide $86 billion in false savings, and this budget gimmick is a prime example of why Americans are losing faith in Washington" (Pecquet, 10/15).

Kaiser Health News: CLASS Dismissed: Obama Administration Pulls Plug On Long-Term Care Program
After looking at a variety of options, the Obama administration determined the CLASS Act program could not simultaneously meet three important criteria: be self-sustaining, financially sound for 75 years and affordable to consumers. The move does not affect the rest of the health care law, although it does remove more than $70 billion in expected federal budgetary savings over 10 years (Appleby and Carey, 10/14).

Bloomberg: Obama Ends Kennedy-Backed Long-Term Care Program As Too Costly To Sustain
The program was "a naked scam, cooking the books trying to cover up the unsustainable cost" of the health law, said Michael Steel, a spokesman for House Speaker John Boehner, an Ohio Republican, in an e-mail. Democrats and Class supporters said it was a well-intended attempt to solve the mounting cost of long-term care for the disabled, which can be as much as $80,000 a year in a nursing home, according to an administration memo (Wayne and Armstrong, 10/15).

The Wall Street Journal: Long-Term Care Gets The Ax
The move emboldened critics of the law, who said the pullback undermines the broader foundations of the health overhaul. ... But supporters of the law say that losing the Class Act will have little impact on the law's effectiveness, given that it was an isolated part of the law. The main parts of the law, particularly its measures to expand insurance coverage to more than 30 million Americans, remain untouched by Friday's announcement (Radnofsky, 10/15).

The Associated Press: Health Overhaul Law Suffers First Major Casualty
Proponents, including many groups that fought to pass the health care law, have vowed a vigorous effort to rescue the program, insisting that Congress gave the administration broad authority to make changes. Long-term care includes not only nursing homes, but such services as home health aides for disabled people. "This is a victory for the American taxpayer and future generations," said Sen. John Thune, R-S.D., spearheading opposition in the Senate. "The administration is finally admitting (the long-term care plan) is unsustainable and cannot be implemented" (Alonso-Zaldivar, 10/15).

NPR: Administration Drops Long-Term Care Provision Of Overhaul
It's not quite right to say the administration has pulled the plug on the measure, which is supposed to provide a modest cash benefit to the elderly for the purchase of long-term care services at home. It's more like they've put it in a medically induced coma while officials try to figure out if a cure can be found for what ails CLASS. ... The biggest problem, of course, is the fact that the CLASS program, which is voluntary, could wind up with only people most likely to need the benefit signing on. That would drive the premiums sky high (Rovner, 10/14). 

Politico: End of CLASS Act Marks Rapid Change For White House
The decision to abandon the CLASS Act announced Friday is a sharp U-turn for an administration that — just a few weeks ago — claimed it was not giving up on the long-term care insurance program. When reports surfaced last month that the CLASS office at the Department of Health and Human Services was closing down, the Obama administration pushed back hard. It claimed that it was paring back staff but continuing to study how to implement the program created by President Barack Obama’s health reform law (Norman, 10/14).

Fox News: The CLASS program was supposed to be a voluntary insurance plan for working adults regardless of age or health. Workers would pay an affordable monthly premium during their careers, and could collect a modest daily cash benefit if they became disabled later in life. The problem all along has been how to get enough healthy people to sign up (10/14).

Los Angeles Times: Obama Administration Drops Part Of Healthcare Law
Kennedy, Pallone and many consumer advocates pushed for the long-term-care program amid evidence that few Americans have private insurance for long-term care. Many elderly Americans face tens of thousands of dollars in bills for home care or for stays in nursing homes, which are not covered by Medicare, the federal program for the elderly and disabled (Levey, 10/14).

National Journal: The controversial insurance program, established under the 2010 health reform law, had been on indefinite hiatus. Staff at the CLASS office within HHS were reassigned last month. Senate Democrats removed all funding for CLASS in the Labor-Health and Human Services 2012 spending bill because program "implementation has been delayed." The program was originally intended to start collecting premiums in October 2012 (McCarthy, 10/14).

Kaiser Health News links to Health and Human Services Secretary Kathleen Sebelius' letter to congressional leaders explaining this decision.

She also offered the following comments in a Huffington Post column: "So even as we suspend work on implementing CLASS, we are recommitting ourselves to the ultimate goal of making sure Americans can get the long-term care they need, whether it's a working-age mom with disabilities who needs daily support right now or a young man at his first job who wants to protect himself and his family against the possibility of huge long-term care costs in the future" (Sebelius, 10/14).

Earlier, related KHN coverage: FAQ: What Factors Affect The Future Of CLASS (Barr, 10/4).