Yes, we're in the middle of another dust-up over a new public insurance program, this time about a plan that makes the federal government the national long-term-caregiver for currently working Americans. CLASS, short for Community Living Assistance Services and Support, is embedded in the health reform legislation passed in the House and pending in the Senate. Its noble purpose: Provide cash payments to disabled people—mainly the elderly—who are unable to function on their own in order to help them either live independently at home or access assisted-living or nursing home care. But Richard Foster, the chief actuary for Medicaid and Medicare, tore the program to shreds in a December 10 memo, saying in essence that CLASS would be a financial mess from the get-go and unsustainable in the long run.
What a shame that CLASS flunks so badly as a help to caregivers. But the fact is, as the actuaries tell us, this voluntary new program would cost more than private long-term insurance and offer far skimpier benefits. The starting average premium would be about $240 per month, taken from your paycheck along with your Social Security and Medicare taxes. The poor would be subsidized by the government. If or when a covered person became seriously disabled, by accident or age, he or she could expect an average benefit of about $50 a day in today's dollars, compared with roughly $165 now paid by the privates. Moreover, CLASS would cover only a tiny fraction of the population, doing virtually nothing for today's frail elderly and their unpaid caregivers—a huge and largely unrecognized part of our health workforce. Indeed, the growing number of elders who need support to live in joy and dignity would not benefit a whit from this new and expensive creation.
Yet with baby boomers feeling the creaks in their own bones and gazing into the fading eyes of their parents, CLASS—like motherhood and apple pie—has a comforting ring to it that might let it slide through. This would be lunacy, if not skullduggery. To be sure, political leaders would take a bow for passing a program that carries the image of mercy. And supporters would take credit for a reform bill that comes in at under a trillion dollars, all told, with a big chunk of the "savings" coming from the CLASS premiums being raked in well before the government has to pay anything out.
But the scheme itself has a fatal flaw. Though employers would be required to automatically enroll employees in CLASS, workers could opt out, as most of the young and healthy would be likely to do. Meanwhile, as older and higher-risk groups signed up and, after five years, became eligible for cash benefits, premiums would skyrocket. In actuarial parlance, the program would fall into an "insurance death spiral."
Those three words alone should trigger nonpartisan queasiness, along with some wonder about other hidden surprises in the massive health reform bills.
CLASS, now exposed, might well be sacrificed in backroom dealings. But let's not just wipe out one of the few elder-friendly components of health reform. How about instead replacing it with a more modest proposal that will facilitate living assistance and support for all frail elderly Americans—and do so now, not years into the future?
Listening to the caregivers themselves would be a place to start. In November, the 2009 report "Caregiving in the U.S.," released by the National Alliance for Caregiving in concert with AARP and the MetLife Foundation, revealed that some 66 million people have taken on this unpaid role. They are overwhelmingly family members looking after their loved ones. No doubt caring for them is often stressful, particularly as they become more incapacitated. And expensive, too. Yet 85 percent of caregivers, whose incomes are for the most part below $100,000 a year, did not see this as a financial hardship. Thanks to a culture of kindness, more than half of our elderly with health difficulties live in their homes; old age, Alzheimer's or some other form of mental confusion, and cancer top the list of their problems.