Work on CLASS Act Halted
October 18, 2011
On October 14, 2011, the Obama administration suspended work on the Community Living Assistance Services and Supports (CLASS) Act, Title XXXII of the Patient Protection and Accountable Care Act (PPACA). The repeal of this provision is pending. Cancelling the CLASS Act is not expected to have any impact on the rest of PPACA.
Designed to establish a voluntary, national insurance program for Americans to help pay for future long-term services and supports, CLASS benefits were to be administered by the Department of Health and Human Services (HHS) and funded by enrollee premiums, not taxpayer subsidies.
The intent of the act was to create a self-sustaining long-term care plan that working Americans would pay into while healthy. This fund would then help cover services they may later need.
Early actuarial analysis predicted that it was unlikely that sufficient numbers of young, healthy people would sign up and adverse selection would ensue. Then, premiums would need to keep rising to cover the likely costs of benefits, resulting in a “vicious cycle” where fewer and fewer healthier people would sign up for the program.
HHS Secretary Kathleen Sebelius wrote: "despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time."
Legislation to repeal the CLASS provisions in current law is estimated to have no budgetary impact, which should clear the way for Congress to repeal it quickly.
To read the HHS Report on the Actuarial, Marketing and Legal Analyses of the CLASS Program, go to http://aspe.hhs.gov/daltcp/reports/2011/class/index.pdf.
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