CBO ESTIMATES CLASS ACT WOULD SAVE NEARLY $60 BILLION OVER 10 YEARS

from MEDICARE WATCH, a biweekly electronic newsletter of the Medicare Rights Center The Congressional Budget Office (CBO) estimated that a legislative proposal to create a new national long-term care insurance program would save $58 billion between 2010 and 2019. CBO also calculated that if the Community Living Assistance Services and Supports (CLASS) Act of 2009 were implemented, it would generate $2.5 billion in savings for Medicaid over the next ten years. The CLASS Act is a part of the final health care reform bill that the Senate Committee for Health, Education, Labor and Pensions (HELP) passed recently. Senator Edward Kennedy, Democrat of Massachusetts and chairman of the HELP Committee, is the primary sponsor of the CLASS Act, which would give American workers the option of purchasing long-term care insurance from the government. Kennedy’s long-term care plan is designed to help adults who have functional impairments pay for support services that would allow them to remain independent, employed and a part of their community. The CLASS Act would automatically enroll eligible workers over the age of 18 in a voluntary national long-term care program. Workers can choose to opt out. Participants would pay a monthly average premium of $65 for five years that would go into an “Independence Fund.” In return, the fund would provide a lifetime benefit ranging from $50 per day to $100 per day, depending on the functional needs of the person. Individuals who do not buy into this benefit when they first become eligible would pay more expensive age-based premiums if they decide to enroll at a later time. CBO’s calculation that the CLASS Act would reduce the federal budget deficit by $58 billion over the next decade is based on the assumption that, although premium payments would begin in 2011, participants would not begin receiving benefits until 2016. CBO also estimated that the CLASS Act could lead to a reduction in Medicaid spending of $2.5 billion over 10 years. CBO explains that this savings may be attributed to individuals, including low-income older adults and persons with disabilities, who would rather pay into the program and receive CLASS Act benefits than rely on Medicaid to pay for their long-term care services.