New health care reform insurance program will let elderly or disabled Americans stay in their homes

From Reuters:

WASHINGTON -- A new government insurance program that would help the elderly and disabled stay in their homes is headed for passage in the U.S. Senate's sweeping healthcare revamp despite doubts about its viability and cost.

The measure has not received the intense scrutiny focused on a proposed government-run medical coverage plan, which has been jettisoned from the the Senate's healthcare bill and is unlikely to be restored in final legislation.

But the Community Living Assistance Services and Supports (CLASS) Act, which was championed by the late Senator Edward Kennedy, is a significant program that supporters say is long overdue and critics say could add to the federal treasury's long-term debt problems.

"If the CLASS Act becomes law, the federal taxpayer is at very serious risk of paying the price to clean up the fiscal disaster when the CLASS Act fails," Republican Senator Charles Grassley said in a Senate speech on Tuesday.

Backers said the bill would allow disabled people to stay in their homes and out of institutional care.

It also could save states billions of dollars in the Medicaid health insurance program for the poor, which provides long-term institutional care for the disabled poor typically at much higher cost than supporting them to stay in their homes.

"We think CLASS is one of the real transformational items in the (healthcare reform) bill," said Larry Minnix, chief executive at the American Association of Homes and Services for the Aging. He said the cost to states to provide long-term care for their elderly and disabled through Medicaid will skyrocket during the next 10 to 15 years without the new program.

The insurance is voluntary and would provide a cash benefit to participants if they become unable to perform at least two activities of daily life, such as dressing and bathing.

Under the Senate proposal, workers pay a monthly premium to buy coverage, probably through their employer. They would have to pay into the program for at least five years before qualifying for benefits.

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The benefit would be at least $50 a day and the nonpartisan Congressional Budget Office, which estimates the cost of pending legislation, assumed it would provide about $75 a day.

Senator Tom Harkin, a Democrat who chairs the Senate Health, Education, Labor and Pensions Committee, says that would be enough to hire a nurse for a few hours to help a disabled person get ready for work or to give a break to someone who is caring for an elderly parent or disabled family member.

Harkin said it was Kennedy's wish that the measure be included in the sweeping healthcare overhaul that the Senate is expected to pass on Christmas Eve.

The measure is supported by dozens of healthcare groups and stands a good chance of being part of a final healthcare bill that goes to President Barack Obama for his signature. But a number of analysts have voiced concern about whether the program would be financially sound over the long run.

"I think there is a significant risk it won't work," said Allen Schmitz, an actuary with Milliman Inc, a global consulting firm. With an initial monthly premium that one estimate said could be as high as $240, few healthy people would choose to purchase the insurance and that could undermine the financial stability of the program, he said.

"They are creating a new government program that everyone concedes is clearly unsustainable," said Dennis Smith, a healthcare reform analyst at the conservative Heritage Foundation think tank.

The insurance program would not screen people the way private insurers do. For that reason the program is likely to attract mostly those who will need some sort of long-term care, eventually undermining its financial health, he said.

The CBO said in its analyses that the program initially would raise enough money to reduce the federal deficit by $72 billion in the first 10 years, with about $2 billion of that attributed to savings in Medicaid, which provides long-term institutional care for the disabled poor.

Premium income would continue to help reduce federal deficits in the second decade. But after that it would begin to add to deficits as benefit payments exceeded premium income and any savings to the Medicaid program, CBO said without providing specific numbers.

A similar provision was included in the healthcare overhaul passed by the U.S. House of Representatives in November. The House calls for a more expansive program than the Senate. The Senate would make the program available to active workers while the House would allow non-working spouses to join as well.

The two chambers would have to work out their differences before a final bill can be delivered to Obama.