Health Insurance and You!

When last year’s health overhaul was passed, it included a little-known provision for long-term care insurance, known as the Community Living Assistance Services and Supports (CLASS) program. According to an issue brief from the Kaiser Family Foundation, CLASS “establishes a national, voluntary insurance program for purchasing community living services and supports that is designed to expand options for people who become functionally disabled and require long-term help.” People who pay into the program during their working years will be able to get services like home care, adult day care, or nursing home residency if and when they eventually need them.

Lately, several groups have expressed concern about whether CLASS can pay for itself, as the law requires. In May, the Robert Wood Johnson Foundation and the journal Health Affairs published a health policy brief on its sustainability, focusing on existing programs that serve similar needs, what CLASS adds to them, and possible ways to make it viable.

Now, the National Conference of Insurance Legislators (NCOIL) has added its opinions to the mix. In a blog post for The Hill, Sam Baker describes the scenario that NCOIL is dreading: that initial premiums for the program may be low, encouraging people to enroll, but that its costs – long-term care can be expensive, and by definition, lasts a long time – will soon go beyond what it can earn from its low premiums. To stay afloat, CLASS would have to increase premiums, driving away the healthy customers who are less likely to need assistance and thus help to pay for the customers who do need help. To make up those losses, the program would be forced to raise premiums again, causing a vicious cycle that insurers call adverse selection.

So, what can be done to avoid that scenario? Baker’s article suggests that the administrators of health reform reach out to state-level insurance officials, who have experience regulating long-term plans run by private insurers.  The Health Affairs article suggests mandating CLASS coverage for anyone above a certain age, an option that may not be popular. Other possibilities include having enrollees pay into the program for a longer time before being eligible for benefits, adjusting premiums based on age, and giving employers an incentive to encourage their employees to participate.

During the next few months, federal officials will consider these solutions and come up with ways to implement them. In the meantime, for more information on what long-term insurance should be used for and who should buy it, read our reference page on long-term care insurance.