Statement on Community Living Assistance Services and Supports
before the House Energy and Commerce Subcommittees on Health and Oversight and Investigations

October 26, 2011

LeadingAge appreciates the opportunity to submit a statement for the record of this hearing on the Community Living Assistance Services and Supports (CLASS) program.

LeadingAge is an association of 5,500 not-for-profit organizations dedicated to expanding the world of possibilities for aging. We advance policies, promote practices and conduct research that supports, enables and empowers people to live fully as they age.

With all due respect, we do not agree that CLASS is unsustainable. What is unsustainable is the present non-system of financing long-term services and supports for people of every age who develop serious mental and/or physical disabilities.

Statement on Community Living Assistance Services and Supports
before the House Energy and Commerce Subcommittees on Health and Oversight and Investigations

October 26, 2011

LeadingAge appreciates the opportunity to submit a statement for the record of this hearing on the Community Living Assistance Services and Supports (CLASS) program.

LeadingAge is an association of 5,500 not-for-profit organizations dedicated to expanding the world of possibilities for aging. We advance policies, promote practices and conduct research that supports, enables and empowers people to live fully as they age.

With all due respect, we do not agree that CLASS is unsustainable. What is unsustainable is the present non-system of financing long-term services and supports for people of every age who develop serious mental and/or physical disabilities.

LeadingAge’s support for the CLASS plan evolved out of two years of study by our Long-Term Services and Supports Financing Task Force (2004-2006) on how these costs can be financed in the future. Looking ahead, the task force concluded that Medicaid cannot continue as the default and primary payer of long-term services and supports costs. Currently the program pays 49% of the total cost of long-term services and supports, making it the predominant source of financing in this field.

We are seeing the task force’s prediction fulfilled, as states are making drastic changes in their Medicaid programs to keep spending in check and balance their budgets. Having already cut payments to health care providers well below the costs of providing care, states now are taking such drastic actions as eliminating coverage of adult day services (California), restricting coverage of adult diapers (Nebraska), and limiting coverage of hospital stays to ten days per year (Hawaii). Clearly Medicaid cannot now and certainly in the future will not be able to adequately meet the long-term services and supports needs of a rapidly aging population.

The LeadingAge task force examined the potential for expansion of private long-term care insurance. They noted the barriers that prevent thousands of middle-aged Americans with pre-existing health conditions from qualifying for this type of insurance. Even if the uptake of private long-term care insurance were to escalate well beyond current projections, millions of Americans will remain uninsured for potential long-term care costs.

Our task force concluded that an alternative to Medicaid was essential and that it had to be as widely available as possible. Our task force recommended a flexible benefit, including cash payments to qualifying beneficiaries, to obtain the services they actually need, when they need them, in whatever place they call home. As enacted under the Affordable Care Act, the CLASS program meets the criteria our task force recommended for a healthy, affordable and ethical means of financing long-term services and supports.

Personal responsibility is an important element of CLASS. Many opponents of CLASS have criticized it as a new entitlement program. What these criticisms fail to recognize is that the costs of long-term services and supports now are paid predominantly by Medicaid, an existing entitlement program.

The difference between CLASS and Medicaid is that CLASS will require participants to contribute to the program, providing it with dedicated funding to cover the cost of benefits. CLASS was enacted specifically as an alternative to Medicaid. In scoring CLASS, the Congressional Budget Office factored Medicaid savings into its projections. CLASS will give Americans a structure for responsible planning for their own long-term services and supports needs. Medicaid, on the other hand, is financed entirely out of federal and state general tax revenues and is a growing burden on federal and state budgets.

The Affordable Care Act did not specify the premiums to be paid into the program, the amount of benefits that would be paid to participants who developed a qualifying disability, or many other program details. These determinations are to be made by the Department of Health and Human Services (HHS). HHS is supposed to have the assistance of an advisory council made up of experts in the field to make these determinations. The advisory council has not yet been convened; appointing advisors to this council would be a positive step toward putting CLASS on a sound financial footing.

Critics of CLASS have called the program fiscally unsustainable (“failed” is not an appropriate term to describe a program that has not yet been put into effect). They predict that the program’s costs would outstrip the premiums collected to finance it.

Yet at an in-depth briefing held during LeadingAge’s annual meeting on October 17, Bob Yee, the actuary who had been tasked with beginning to draft the CLASS insurance program, indicated that the program can be actuarially sound and that there is much work to be done.

The real point is that long-term services and supports costs will not disappear if the CLASS program is not implemented. All but the wealthiest Americans have insufficient income and savings to cover the cost of long-term nursing home care or even extensive services provided in a home- and community-based setting. Private long-term care insurance covers only a small fraction of long-term services and supports.

Without CLASS, people who need help with the most basic activities of daily living will continue to be thrown onto the Medicaid rolls. The federal and state governments will have to continue paying for needed long-term services and supports, but without the revenues that the CLASS program would generate.

The CLASS program was based on decades of study and discussion among policymakers and notable experts in the field of long-term services and supports. We really have to question what ideas the critics of CLASS have for financing long-term services and supports. If not CLASS, then what? “I don’t know,” or “we’ll figure something out,” are no longer acceptable answers.

We have run out of time for partisan wrangling. Ten million Americans today need long term services and supports—including 4 million under age 65.  As the baby boomers age into retirement, these numbers will more than double.

With CLASS, we will have the chance to insure ourselves against perhaps the biggest blank check risk any of us will face: the need for substantial help to live, work and function in a place called home.

We call on both Congress and the Administration to keep this program in operation and to move forward with its implementation.