Sept. 22 (Bloomberg) -- U.S. health officials said they will trim staff from a long-term care insurance program that was part of the 2010 health-care law, adding that the initiative may never proceed.
Known as the “Class Act,” the program was designed to keep those with disabilities or impairments in performing daily tasks out of nursing homes. Congressional Republicans say the initiative is fiscally unsustainable because premiums paid into the program won’t cover benefits in later years.
The law doesn’t stipulate when the program is supposed to begin, and the U.S. Department of Health and Human Services offered no details in a statement today. “It is an open question whether the program will be implemented,” said Richard Sorian, a department spokesman, in an e-mailed statement. “We are continuing our analysis of this program. A Class program will only be implemented if it is fiscally solvent, self- sustaining, and consistent with the statute.”
An indefinite delay would make the program the biggest component of the overhaul that has been halted or repealed.
A memo published by the Republican Policy Committee, a group of senators, cites an employee of the U.S. office as saying the program is shutting down.
The memo refers to an e-mail from Bob Yee, an employee with the department.
“Yee - the actuary HHS hired to run the Class program - this morning sent around an e-mail to his colleagues noting that he would be ‘leaving his position as the Class Office actuary as HHS has decided to close down the Class Office effective tomorrow,’” the Republican memo said. Chris Jacobs, the policy committee aide who wrote the Republican memo, didn’t respond to an e-mail requesting a copy of the full letter.
Office Not Closing
While the staff of the Class office has been reduced, reports that it’s closing are inaccurate, said Sorian, the health department spokesman.
The Class program was designed as long-term care insurance to help people disabled by illness or accident stay in their homes by paying for support services. By paying a premium into the program, after five years they would be eligible for at least $50 a day of benefits for health and support services, as a way to keep them out of a full-time nursing home.
Republicans have derided it as an unaffordable entitlement program that would cost the government more than it would take in from premiums.
The arguments are backed by Richard Foster, the chief actuary for the U.S. Centers for Medicare and Medicaid Services. Foster, in an April 2010 report, projected that the program would start costing the federal government more money than it took in starting in 2025. “There is a very serious risk that the problem of adverse selection will make the Class program unsustainable,” he said in the report.
Political appointees in President Barack Obama’s administration have also agreed that the program, as envisioned, isn’t sustainable. During a Senate Finance Committee hearing in February, Health and Human Services Secretary Kathleen Sebelius said the program would be “significantly different” than what was initially described in the law.
“We determined pretty quickly that the act be self- sustaining and not rely on taxpayer investment,” Sebelius said in the February hearing. “The program will not start unless we can be certain it will be solvent and self-sustaining into the future,” she said.
Ending the program would deepen the government’s deficit by about $70 billion through 2019, according to the Congressional Budget Office. Premiums paid for the insurance are expected to far exceed benefits paid out in the program’s first decade.
The Senate Appropriations Committee approved a fiscal 2012 spending bill for the health department yesterday that eliminates funding for the Class program. Obama had asked for $120 million.
--Editors: Adriel Bettelheim, Steve Walsh
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