Opponents warn plan could require vast infusions of cash

WASHINGTON (By Lori Montgomery, Washington Post) October 27, 2009 — As congressional leaders haggle over the shape of a proposed government-run "public option" in health-care reform legislation, a quiet revolt is brewing against a different public insurance program — a plan to create government insurance for long-term care.

The proposal is known as the CLASS Act, short for Community Living Services and Support. The idea has been around for years, and the late Sen. Edward M. Kennedy (D-Mass.) pushed to have the measure included in the health-care overhaul package that passed the Senate health committee in July. A similar measure was also adopted by voice vote in one of the three House committees handling health care.

The idea is to create long-term care insurance that would be available to anyone, including those who are already disabled. People would be automatically enrolled, unless they chose to opt out, and would pay a premium in exchange for the opportunity to receive cash benefits to cover the cost of home care, adult day programs, assisted living or nursing homes after they had been enrolled for at least five years. Premiums and benefit levels would be set by federal health officials, but advocates predict that the program would provide beneficiaries with a minimal sum, around $75 a day.

The proposal has gained momentum in recent days as Democrats in both the House and Senate cast about for cash to help finance a final health package. Because the program would begin taking in premiums immediately but would not start paying benefits until 2016, congressional budget analysts have forecast that it would generate a nearly $60 billion surplus over the next 10 years, cash that would help the larger measure's balance on paper.

But an array of groups — including the Congressional Budget Office and the American Academy of Actuaries — have questioned the design of the program, warning that it could easily require vast infusions of cash to cover benefits after 2019.

Sen. Kent Conrad (D-N.D.) called the CLASS Act "a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of," and he vowed to block its inclusion in the Senate bill.

In the House, Rep. Earl Pomeroy (D-N.D.) also questioned the program in a caucus meeting last week. Pomeroy said the nation needs to find a way to relieve the heavy burden that now falls on Medicaid to cover the cost of nursing home care. But he said that will require long thought and hard decisions, "not some provision cooked up by advocacy groups at the last hour."

Advocacy groups, for their part, counter that the program would be actuarially sound far into the future and would save Medicaid money.

"It is not a Ponzi scheme," said Larry Minnix, president of the American Association of Homes and Services for the Aging, which represents nonprofit providers and is one of more than 200 consumer and other groups supporting the legislation. "It is a consumer-funded insurance pool that provides people a cash benefit to help with simple chores of daily living so they can remain independent."

A: Prices for both Medicare Part D prescription-drug plans as well as Medicare Advantage plans are going to rise in 2010. And you have from Nov. 15 to Dec. 31 to decide whether you want to stay in the same plan or switch plans for 2010.

Average premiums for Part D plans are increasing 7 percent in 2010, to $30 a month, and average premiums for Medicare Advantage plans are jumping 22 percent, to $39 per month. These price hikes may be particularly tough to stomach next year, when Social Security will not have a cost-of-living increase.

And premium increases are only part of the picture. For 2010, more than 60 percent of Part D plans will charge an annual deductible ($310 is standard) before covering any drug costs, up from the 45 percent that charged a deductible in 2009, according to the Kaiser Family Foundation.

Fewer Part D plans will provide coverage in the so-called doughnut hole, which begins after you reach $2,830 in total drug spending and extends until your total drug costs for the year reach $6,440 in 2010; within that gap, you generally have to pay all the bills yourself. The plans that do provide some coverage in the doughnut hole cover only the cost of generic drugs; otherwise, you’re on your own.

And be sure to check how each Part D plan treats your specific medications. Co-payments are rising, and many insurers are changing formularies. For example, you could end up with higher out-of-pocket costs if your insurer switches your drug from preferred to co-pay non-preferred.

Ask your doctor whether you can switch any of your drugs to a generic or lower-cost medication; the policy with the best deal for brand-name drugs may not be the best deal for generics.

The Medicare prescription-drug-plan finder is an excellent tool to analyze the costs of Part D plans for your situation. Type in your drugs and dosages, and you’ll see total out-of-pocket costs — premiums as well as co-payments — for your medications throughout the year. Or call (800) 633-4227 for personalized assistance.

This year’s premium increases come on top of previous cumulative price hikes. Premiums for AARP MedicareRx Preferred, the most popular Part D plan, have risen by 50 percent since 2006, according to Avalere Health, a health-care consulting firm. Premiums for Humana Enhanced, also a popular plan, have increased by 180 percent over the same time period.

A: Prices for both Medicare Part D prescription-drug plans as well as Medicare Advantage plans are going to rise in 2010. And you have from Nov. 15 to Dec. 31 to decide whether you want to stay in the same plan or switch plans for 2010.

Average premiums for Part D plans are increasing 7 percent in 2010, to $30 a month, and average premiums for Medicare Advantage plans are jumping 22 percent, to $39 per month. These price hikes may be particularly tough to stomach next year, when Social Security will not have a cost-of-living increase.

And premium increases are only part of the picture. For 2010, more than 60 percent of Part D plans will charge an annual deductible ($310 is standard) before covering any drug costs, up from the 45 percent that charged a deductible in 2009, according to the Kaiser Family Foundation.

Fewer Part D plans will provide coverage in the so-called doughnut hole, which begins after you reach $2,830 in total drug spending and extends until your total drug costs for the year reach $6,440 in 2010; within that gap, you generally have to pay all the bills yourself. The plans that do provide some coverage in the doughnut hole cover only the cost of generic drugs; otherwise, you’re on your own.

And be sure to check how each Part D plan treats your specific medications. Co-payments are rising, and many insurers are changing formularies. For example, you could end up with higher out-of-pocket costs if your insurer switches your drug from preferred to co-pay nonpreferred.

Ask your doctor whether you can switch any of your drugs to a generic or lower-cost medication; the policy with the best deal for brand-name drugs may not be the best deal for generics.

The Medicare prescription-drug-plan finder is an excellent tool to analyze the costs of Part D plans for your situation. Type in your drugs and dosages, and you’ll see total out-of-pocket costs — premiums as well as co-payments — for your medications throughout the year. Or call (800) 633-4227 for personalized assistance.

This year’s premium increases come on top of previous cumulative price hikes. Premiums for AARP MedicareRx Preferred, the most popular Part D plan, have risen by 50 percent since 2006, according to Avalere Health, a health-care consulting firm. Premiums for Humana Enhanced, also a popular plan, have increased by 180 percent over the same time period.

Long-term care gets short shrift in health debate

New insurance program worth considering as Baby Boomers age.

For Donna Taylor, 41, "life as we know it just changed" one day. Her father began suffering from an illness that left him unable to walk — and no longer capable of taking care of either his mother, who has dementia, or his wife, who suffers from chronic kidney disease. Taylor suddenly confronted a dilemma that millions of other Americans already face: how to take care of loved ones who cannot do so for themselves.

Her options came as a shock. Medicare pays only for temporary nursing home stays, and regular health insurance policies don't cover long-term care. Medicaid does, but only if a person spends down hard-earned assets to be poor enough to qualify. Oh, and when Medicaid does kick in, it tends to be skewed toward putting someone in costly nursing homes, rather than finding ways to help people stay in their own homes and communities as long as possible.

Arizona Baptist Retirement Centers

Donna Taylor, who cares for her mother and grandmother, talks about her father's last days, the burden of long-term care and CLASS Act — an insurance policy she hopes becomes law. Taylor says CLASS Act would have helped her family care for her dad at his home. Instead, he died in a nursing home.

Taylor and her siblings joined millions of Americans who take on the caregiver burden themselves. It is, she says, a labor of love. And utterly exhausting. Yet for all the pervasiveness of long-term care problems, possible solutions haven't had a prominent place in this year's health care debate. As one expert quips, long-term care is fourth on every reformer's list of the top three things to do.

One promising idea that deserves more attention than it has been getting is the Community Living Assistance Services and Supports (CLASS) Act. Championed by the late Sen. Edward Kennedy, it is included in some, but not all, of the reform measures being considered in Congress.

This plan would establish government-run, long-term insurance through payroll deductions. It would not be subsidized by employers, and people could opt out. After paying in for five years — with premiums of about $120 a month — people who became unable to take care of themselves would qualify for modest stipends of perhaps $50 to $75 a day.

That's far below the $190-a-day average nursing home cost, but one potential benefit is that CLASS could focus Americans' attention on long-term care issues. It might even kick-start interest in the fledgling private long-term care insurance market that provides more complete "wraparound" benefits.

The Congressional Budget Office and other analysts say the plan would take in $73 billion more than it pays out in the first 10 years. It would also likely reduce Medicaid costs, the single biggest budget item for most states. Private insurers warn, however, that the plan would give people a false sense of security and ultimately require big federal subsidies.

Given the history of government-run insurance programs and budgetary sleights of hand, sound long-term financing is a valid concern. CLASS might or might not be the best approach; other proposals would tweak Medicaid to help people stay at home longer, though they don't address the need to be poor enough to qualify.