Has anyone heard of the Community Living Assistance Services and Support Act or Class Act? (CLASS ACT) Well there really hasn't been too much discussed regarding this feature of the Health Reform (PPACA). But it could be a good thing.....maybe.
This is the Government-Run, Long Term Care Plan that is slated to go into effect in 2011. As of right now, many of the details are yet to be ironed-out but below are some main points of the plan.
- Average premium should be in the $150 per month range (less for youngers, more for olders)
- You must pay into the plan for 5 years before accessing any benefits
- You must be actively at work at least 3 out of 5 years
- Guaranteed Issue (Except for the limitations noted above)
- It is a voluntary plan primarily delivered through employers-employers are able to opt-out or opt-in. If employers opt-in employees area able to opt-out on a case by case basis.
- According to The Congressional Budget Office (CBO), it projects the CLASS ACT will produce a total of $70 Billion in surplus by 2019.
So these are the basic main points of the plan. For many who would otherwise be un-insurable, this could be an excellent alternative to spending down assets and utilizing medicaid.
But, for those that are relatively healthy, have significant assets to protect, this may not be the option for you. Those that are healthy will bypass this option and go to the individual market to purchase, arguably, better and more comprehensive coverage at a lower cost. Therefore, what you are going to have is a huge pool of unhealthy people who will probably require Long Term Care at some point or another.
Many critical thinkers believe that this plan is nothing more than a catastrophe waiting to happen. According to Kent Conrad, (D-ND), Chairman of the Senate Budget Committee, speaking on the sustainability of the Class Act stated "a ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of."
The 70 Billion surplus that the program is designed to achieve is primarily due, in large part, to not being able to access benefits for five years. In other words there will be five years worth of buy-in and no benefits being paid out. However, in that sixth year, as benefits are paid out, the program will start a death spiral that will, more than likely, be unsustainable.
It would seem that the only way for this program to have any chance of being able to survive on its own would be to make the program mandatory, every person would need to buy in. And we all know how well our current mandatory programs are working now.
Make no mistake about this program, it is designed to subsidize the ever-increasing cost of those people who have no long term care insurance and are on medicaid. If the government can get people to pay for something they are going to receive anyway, why not?
