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Senate Matches $825 Million Funding of Section 202

July 23, 2010 in advocacy, housing, politics, seniors by Nancy Libson | No comments

It’s a fait accompli!

On July 21, the U.S. Senate Transportation, Housing and Urban Development (THUD) Subcommittee matched the U.S. House of Representative’s funding for Section 202 housing with the approval of its fiscal year 2011 appropriations bill.

“The bill ensures the most vulnerable among us have access to housing and provides $825 million for the elderly and $200 million of housing for the disabled,” said THUD Subcommittee Chair Sen. Patty Murray (D-Wash.). “This bill will help our economy continue to recover from the recession and it will help our communities reinvest in our infrastructure, and it does so with a funding allocation that is the same as fiscal year 2010 enacted level.”

Now that both the House and Senate Appropriations Committees have agreed to provide $825 million for the Section 202 program for fiscal year 2011, we are assured of funding for new development of Section 202 housing next year even if final action of the 2011 budget will not happen until after the November election.

And we couldn’t have done it without the cards, letters, calls, and visits of AAHSA staff, AAHSA state affiliates, AAHSA members, and our friends and allies among housing advocates in D.C. to members of the House and Senate since the day that the administration released its budget request way back in February.

As you know, the administration recommended that there be no funds for new development of Section 202 housing pending “reforms” of the program to better target funding, to better leverage funding, and to redesign the program as a platform for the delivery of supportive services.

From that moment on, we delivered our message:  We, too, want to reform the program, but it can be done without suspending funding that would not made available until the spring of 2011.

And we are hard at work offering ideas about reform that can be achieved though the notice of funding availability (NOFA) process and without changes in the law.

It seems the congressional appropriators heard our message!

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Still More Work on Health Reform

March 22, 2010 in advocacy, congress, financing long term care, health care, making a difference, policy, politics, reform, seniors by Larry Minnix | No comments

The U.S. House vote last night was a monumental moment for our country, our field and our association.  We here at AAHSA could not be more pleased with the passage of health reform and the inclusion of the Community Living Assistance Services and Supports (CLASS) Act provisions in the bill.

I’d like to thank all those who worked to ensure that long-term services and supports were included in this transformational legislation.  Long after CLASS is serving Americans, the visibility we achieved and the relationships we forged will sustain our mission for the future.

Despite passing this tremendous milestone, our work is not done.  First of all, the U.S. Senate must pass the reconciliation bill without amendments.  Secondly, we must continue to educate America about the CLASS Act and why it will help all of us take responsibility for our care.

Many legislators and pundits still don’t get it.

Stay tuned for phase two…

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CLASS Act Approved As Part of Health Reform

March 22, 2010 in Medicare, financing long term care, health care, long-term care, medicaid by Craig Collins-Young | 7 comments

House Passes Health Care

After many years of hard work, advocates for seniors and persons with disabilities received a huge win with the passage of the Community Living Assistance Services and Supports (CLASS) Act, a measure included in the Senate health reform bill (H.R. 3590) that was approved 219 to 212 by the U.S. House of Representatives on Sunday night.

“This is a victory for the American people. And, it’s a victory of common sense,” President Obama said after the historic vote. “It’s not radical reform, but it is major reform,” added Obama.

The CLASS provisions would create a national insurance trust to provide modest cash benefits those in need. The legislation also would expand Medicaid to include 133 percent of federal poverty level ($29,327 for a family of four), and close the Medicare prescription drug “doughnut hole” by 2020. Starting in 2011, seniors affected by the “hole” would be eligible for a 50 percent discount on brand name drugs.

“The CLASS Act provisions included in the legislation will help seniors and people with disabilities obtain the services and supports they need to stay functional and independent, while providing them with choices about community participation, education and employment,” said Larry Minnix, AAHSA president. “We look forward to working with Congress and the Obama administration to implement this new insurance program that will help people take responsibility for their care as they age.”

After approving the health reform bill, the House voted to approve the Reconciliation Act of 2010 (H.R. 4872), which amends the Senate measure.

Speaker of the House Nancy Pelosi (D-Calif.) said the bill “enables people to have the freedom to have a healthy life,” calling it an “All American Act.”

H.R. 3590 heads to the president’s desk, while the reconciliation bill heads to the Senate for further deliberation. Sen. Harry Reid (D-Nev.)  believes a vote on the reconciliation bill will occur this week. We urge the Senate to pass the reconciliation bill sans amendments.

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Status and Implications of Health Reform Bills

January 8, 2010 in CCRC, Medicare, advocacy, assisted living, congress, financing long term care, health care, long-term care, medicaid, policy, politics, seniors by Larry Minnix | No comments

This is a report to AAHSA members on the status of the two health care reform bills and what AAHSA will continue to emphasize as a final bill is negotiated between the Senate and the House of Representatives.

Part of my responsibility as your CEO is to make sure you get the best information we can find or develop on the content of the bills in play. We pore through the actual bills as well as reliable analytical sources. There is much misinformation in the media around these bills.

This report is organized in the following way. Section One is “Layers of Bill Comparisons” from the 50,000-foot, 10,000-foot, and ground levels.

Section Two is AAHSA’s health care reform list of priorities as those affect our members’ missions and my brief interpretation of the status of those provisions.

Section Three addresses “Implications for Member Strategic Planning.”

Before we get to those sections, there are four process issues to keep in mind. One, AAHSA’s positions have been developed over a period of years through numerous forums of members, outside experts, and the AAHSA staff. Our positions are screened through our stated mission, vision, values, and principles. Our question is always: “Is this the right policy for the right reasons?”

Two, we are part of coalitions in Washington, D.C., that include many close allies in values and direction. We have the most in common with key faith-based groups. We take the lead on issues that are at the core of our mission – long-term services and supports for seniors. We are also part of business and non-profit coalitions that take the lead on other provisions, like health insurance coverage and employer issues. Throughout, we maintain our purpose while seeking common ground with others.

Three, no bill has everything we want. Our approach is to advocate for provisions that advance our cause and work hard to eliminate provisions that are counter-productive. Overall, we believe that a final bill will be beneficial to seniors, members, employees, and society as a whole.

Four, the misinformation and misunderstanding about the health bills are enormous. Separating fact from fiction is a major challenge in this complex situation. We stay close to original sources – both written drafts of bills and the staff and elected officials who write them. We have daily contacts with key congressional and White House staff.

Section 1: The Layers
As you know, the House and Senate bills together comprise several thousand pages. Beyond the legalities of it, we must boil it down to the substance. An excellent source for the 50,000-foot view of the side-by-side of substance of these bills is provided by the Henry J. Kaiser Family foundation and is entitled, Focus on Health Reform – Side-by-Side Comparison of Major Health Reform Proposals.

At the 10,000-foot level, we refer you to the SCAN Foundation analysis entitled, Summary of Key Provisions Supporting the Continuum of Care for Seniors in the House and Senate Health Care Reform Bills.

At the ground level, our staff created side-by-side comparison on the direct implications of both bills for our members as providers, as well as a comparison for our members as employers.

Section 2: AAHSA Priorities
AAHSA’s two major priorities in health care reform are the preservation of the Medicare market basket and passage of the Community Living Assistance Services and Supports (CLASS) provisions. The market basket helps stabilize member revenue amidst continuing uncertainties about Medicaid. CLASS creates a new long-range financing mechanism for long-term services and supports. The Senate bill has both provisions. The House bill has CLASS, but immediately eliminates the market basket.

The Senate bill assumes that Medicare Part A nursing home reimbursement increases can be reduced by $14 billion dollars over the next decade. The House bill would almost double those reductions, a situation our members cannot sustain. On the other hand, the House bill increases reimbursement for non-therapy ancillaries to cover costs of complex patients and extends the therapy caps exception process for two more years.

The Senate’s $14 billion dollar reduction keeps the automatic market basket adjustment, while assuming we can achieve efficiencies through better care management opportunities as yet to be developed.

All three major associations representing nursing homes are together on the major priorities: Preserve the market basket! Keep CLASS! Please Contact Congress and tell your legislators about these priorities.

There is a provision in the Senate bill to delay implementation of RUGs IV. We oppose this delay because RUGs IV implementation will benefit nursing home members who take care of more complex patients, which is a majority of our Medicare nursing home membership. Currently, our members are often under-reimbursed for complex care. RUGS IV is designed to help solve that problem.

In addition, both of the bills have favorable provisions to expand home and community-based services (HCBS) and adult-day programs, favorable treatment for Special Needs Plans (SNP) and Programs of All-Inclusive Care for the Elderly (PACE), and improved support for staff — especially direct-care. Both have support for culture change, technology utilization, a mandate to evaluate the CMS five-star nursing home rating system.

Both bills also have transparency/disclosure improvements (which we support) with increased fines in the House bill (which we oppose).

We cannot fine our way to better quality.

Medicaid has been dealt with incrementally in both bills. (There is a beginning recognition that Medicaid needs a comprehensive overhaul for future consideration.) The House bill adds $6 billion for nursing home Medicaid reimbursement, however, similar to stimulus bill provisions, we are not sure which nursing homes they would benefit and how much. We believe this provision was added as a gesture to mitigate the House plan for deeper Medicare cuts. But we do not see market basket for Medicaid support as a “good trade off.”

The market basket remains essential!

There are other subtle, but far-reaching provisions in both bills that address two major issues: better care coordination and innovation. Code words that reference these provisions are “transitions,” “care management,” “bundling,” “accountable care organizations,” “interdisciplinary care,” “community-based collaborative care networks,” and “acute care episode demonstrations.” We support the direction of all these provisions. Our challenge will be to aggressively pursue the development of models that work for the future.

As for CLASS, it is in both bills, for which we are grateful to the leadership of the House, Senate, and the White House. Our objective is to keep it in a final bill.

Section 3: Implications
Whatever your political point of view — I hear those views from all sides — we assume there will be a major health reform bill and it will have provisions substantially consistent with what is described in this report. If that assumption is correct, here are the BIG THEMES all of us need to consider in our strategic planning:

  1. Prepare to Change and Be Innovative
    We will have opportunity to develop new models around care and service coordination, and to create of community networks, with new financing mechanisms. Prepare to be either leaders or followers; the “bundler” or the “bundled.”
  2. Become More Consumer Centered and Consumer-Directed
    The marketplace of a free enterprise economy eventually gets what it wants, and it always makes its decisions around perceived value. Assume that your consumer is the family unit: seniors and those who care about them. Transparency, value, accountability will drive consumer choices in the future, as we move toward consumer-defined quality.
  3. Reach Beyond Your Walls
    Most people want to stay at home. Many will continue to view planned communities like CCRCs or housing with services models as excellent alternatives to being at home alone, but preferences always begin with independence and choice.
  4. Become Experts in Care and Service Coordination in Your Community
    Seniors and families desperately need experts to guide them through evaluation and pursuit of alternative choices — often in a crisis. Providers who claim that position of trust in a family’s life will be the leaders in local communities and be the provider and employer of choice for the future.
  5. Get more Efficient
    You must assume minimal Medicaid increases (neither the House nor the Senate address Medicaid substantially in terms of the inadequate and fragmented funding), therefore, you will want to carefully position or reposition your program mix. You’ll also want to plan for services that people can pay for at various levels of the socioeconomic spectrum. You will want to begin to think about revenue, not just reimbursement. Consumers will have dollars to spend to meet their needs, but those won’t necessarily come from reimbursement.
  6. Invest in Your Workforce
    Successful members of the future will invest in the recruitment, retention, and development of people — especially direct care staff and their supervisors. The availability of basic health and long-term care insurance will help with stabilizing the lives of many of your employees. Yes, it will have a cost, but the cost of not doing so is far more dramatic as we look to the future. A stable and satisfied work force is the key to a successful and viable future.

You and I must look above the complex details of thousands of pages of legislative language, and we must hear the major themes of important change in the midst of media and political noise. We can lead change, participate in it, complain about it, or resist it. But it will occur. AAHSA is committed to leading and participating.

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AAHSA Stands Up at Health Reform Event

December 22, 2009 in 1 by LaurenShaham | No comments

Larry Minnix greets Sen. Tom Harkin (D-Iowa) after the Senate press event.


AAHSA was one of several groups standing with Sens. Harry Reid (D-Nev.), Max Baucus (D-Mont.), Christopher Dodd (D-Conn.) and Tom Harkin (D-Iowa) at a press event today to celebrate moving one step closer to passing health reform legislation.

The four senators praised groups like ours for mobilizing members to show their legislators that Americans want health reform. I was proud to see Larry Minnix, Barbara Manard and Marsha Greenfield standing behind the senators as they praised these groups and each other for advancing health care reform.

Sen. Reid used a baseball analogy to describe how Sens. Dodd, Baucus and Harkin were essential members of a line-up to make health reform happen. I think the baseball analogy is appropriate for health care reform. We can never tell how long a phase or inning will last and the tide can change so quickly.

I’ll be watching the vote on Dec. 24 and waiting eagerly for the home run of seeing the Senate pass its health reform bill. But, that vote will still be only another inning in this very long baseball game of health reform. The ninth inning will be the conference negotiations. And when they get through that, it will be a true game-winning grand slam.

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Cokie Touts CLASS

December 17, 2009 in advocacy, caregiving, politics by SarahMashburn | 2 comments

You may know Cokie Roberts as a reporter or a television personality, but she’s also the daughter and daughter-in-law of two women in their nineties.

Cokie’s the first to admit she and her husband Steven are lucky. Their mothers’ resources cover their care. But they also recognize our country could do better by America’s older adults and their loved ones. And that’s why they are advocating for the CLASS Plan in their weekly column.

I’ve included Cokie and Steven’s column below. Read it and let us know your thoughts. There’s no question that health care is an issue where the personal and political often combine, but will Cokie and Steven’s statement make difference on Capitol Hill?

A CLASS Act deserves support

By Cokie Roberts and Steven V. Roberts

We are the lucky ones.  Not only are we blessed with two mothers in their nineties. We are doubly blessed with mothers whose resources cover their care.  That’s not the norm in America, where the aging population’s need for long term care imposes harsh economic as well as emotional stress on many families.  A provision of the health care bill aims to offer some relief to those families and we’re all for it.

The Community Living Assistance Services and Supports Act, called CLASS, was one of Teddy Kennedy’s pet proposals in recent years.  It’s a pretty simple idea.  Workers would voluntarily pay into a fund for at least five years and then be able to draw out from it if they become disabled by age or illness.  A daily stipend tied to the degree of disability, to be set by the Secretary of HHS but probably starting at about $75, would go for whatever was needed,someone helping out at home, transportation to senior day care, installation of handicap friendly devices,allowing many individuals to remain in their communities and out of costly nursing homes.

 For people who aren’t as lucky as we are, that’s often the only choice.  Their parents, or a disabled brother, might need assistance in eating, bathing, dressing or moving from a chair to the bathroom.  A small stipend can make all of the difference.  It can mean an elderly person can stay at home with some assistance getting dressed and fed.  It can mean family caretakers can keep their jobs if someone can cover for them at home in the hours they are away from a live-in parent.
As it is now, in order to receive care many disabled and elderly people are forced to divest themselves of all their assets so they can qualify for government assistance through the Medicaid program.  And in many places that means moving to a nursing home.  We taxpayers are footing the bill for those nursing homes, which usually run about $200 a day.
 
Under the long term care plan now before the Congress, the people who receive the care pay for it.  Premiums would be automatically deducted from paychecks unless a worker makes a positive determination to opt out of the program.  And the law as drafted by the Senate specifically states “No taxpayer funds shall be used for payment of benefits.”   The program is designed to pay for itself through premiums and interest on the trust fund generated by those premiums, which can’t be touched for five years.

In the first ten years of the program the Congressional Budget Office expects the CLASS provisions to add about $72 billion to the federal coffers–a huge chunk of change tempting to lawmakers who would use it to draw down the deficit.  That’s a legitimate fear, given the Congressional track record on other trust funds.  And a sense of the Senate amendment insisting that the CLASS fund should not be used for anything other than long term care doesn’t do much to quell the skeptics who believe the program will eventually grow into a massive budget buster. 
 
And those skeptics abound, some of them spurred on by the insurance companies that sell long term care policies.  Despite language passed by the Senate that requires CLASS to stay sound over a 75 year period, critics insist that the program is bound to go broke when the number of people who need long term care, now about ten million, more than doubles with the retirement of the Baby Boom.  Premiums will go so high in order to keep up with benefits, they argue, that no one will buy them so taxpayers will have to subsidize them.

There are lots of reasons to believe that won’t happen.  But even if it did, it would be no worse for taxpayers than what’s happening right now.  We are paying about $100 billion a year for long term care through Medicaid and that number is going to go geometrically higher if no other provision is made for people who need help.  How can forcing people into poverty so the government can pay for them be better than setting up a program where workers pay for themselves?  How can pushing people into nursing homes be better than letting them stay in their houses? As a caller to a public radio program on the CLASS plan asked, “Why not try something where I can exercise my own responsibility for my future?”

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Senate Event Showcases Need for CLASS Act

December 14, 2009 in Medicare, advocacy, financing long term care, health care, long-term care, medicaid, retirement, seniors by SarahMashburn | No comments

Senate Press Conference on Long-Term Care

On a Friday afternoon in Washington, it’s unlikely to find four senators in the same room (other than the Senate floor) fighting for the same cause. But that’s just what happened on Dec. 11 at a press event focused on Community Living Assistance Services and Supports Act (CLASS) in health reform.

Sens. Chris Dodd (D-Conn.), Tom Harkin (D-Iowa), Bob Casey (D-Pa.) and Paul Kirk (D-Mass.) joined forces to support CLASS and the Community First Choice Option, urging their colleagues to make sure these provisions remains in the final health care reform legislation. According to Sen. Dodd, CLASS is a program that  ”helps people with functional impairments access the services and supports that allow them to continue to live their daily lives.”

The senators were joined by four individuals who put names and faces on the policies Congress is currently debating. Take Elizabeth Priaulx. She’s a 41-year-old attorney with a successful career and family. The fact she lives with cerebral palsy, a seizure disorder, and mental illness shouldn’t hinder her ability to plan for and receiving help. But it does.

“I’ve looked into long-term care insurance and expected it to be very expensive,” said Priaulx. “And, it was very expensive, but what shocked me was that 15 to 20 percent of all people (like me) who apply for long-term care insurance are rejected because [insurance companies] do health screenings. So, even though I’m lucky that my disability is causing me to look at these issues that everyone is going to have to look at as they get older, I’m not able to take advantage of a system that is supposed to help.”

For Priaulx, the CLASS Act ” might make the difference of me being able to actually find somebody who can come in and help with these things of daily life: getting dressed in the morning, some of the house work I take for granted now. This kind of bill is exactly what we need for something that’s hard to think about: unexpected disabilities that we will all face.”

It’s for people like Elizabeth that we continue fighting  for CLASS:  an affordable, accessible and fiscally solvent way to address long-term services and supports. And even better, it doesn’t cost the government a dime. Isn’t that something we can all support?

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Senate Press Conference Today on How Health Care Reform Bill Affects Long-Term Services

December 11, 2009 in Medicare, advocacy, aging, financing long term care, health care, long-term care, medicaid, policy, politics, reform, seniors by Larry Minnix | No comments

Sen. Harry Reid’s office is holding a press conference today (1 p.m. today in the Senate Visitor’s Center Room 210) to discuss how the Senate’s Patient Protection and Affordable Care Act improves access to quality, affordable long-term services and supports.

Decisions about the Senate’s bill are forthcoming. The overall final health care reform bill will be a giant leap forward for the uninsured and for any of us vulnerable to loss of health insurance coverage. From what we know, our most important priorities are still included: the CLASS Act, preservation of the Medicare market basket, pilot projects to demonstrate better care management, a center for innovation at CMS, Medicaid improvements, and closing the Part D doughnut hole.

I believe we are close to making the big transformational change so necessary at this point in time. But this is difficult.  Many nay-sayers and pundits- for reasons that mystify me. And no change this big has taken place in health care for 50 years. But we are so very close.

Our major opposition at this time is coming in the form of the long-term insurance sector, which is flooding the Senate with lobbyists and outdated information (for some good information, read this this op-ed from Donald H. Taylor Jr., an assistant professor of public policy at Duke University).

The next several days are critical.

The Senate could be ready to vote next week, after the Congressional Budget Office (CBO) gives a score on the modifications being made related to the public option. Until then, political rhetoric and half- baked media messages will abound.

I’ve been telling senators and media that if the CLASS Act provision remains in the final bill, we’ll look back in about a decade or so on CLASS as the hidden gem in this bill that changed services delivery to make it consumer friendly, virtually eliminated most family exposure to financial ruin in caring for a loved one at home, and stemmed the Medicaid tsunami.

We at AAHSA will continue to help all of you as leaders separate fact from fiction in that regard.

A final bill won’t be perfect, but the big paradigm changers are provisions for the uninsured, insurance reform, CLASS, and mechanisms that stimulate innovation. The downstream affects on the seniors we serve, our workforce, and our potential leadership roles in our communities are potentially very constructive.

The initial bill met AAHSA’s criteria for a healthy, ethical, and affordable plan. I anticipate the modified one will do so as well.

The closer we have worked with Senate leadership and their staffs, the more impressed I am with their personal passion for wanting to help people. And the more some of them like Sen. Reid are willing to risk their political career to get the right thing done for people.

Continue to let your senators know that you expect reform to occur NOW.

And thank them and their staffs for their hard work.

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Senate Votes to Keep CLASS Act in Health Bill

December 4, 2009 in Medicare, financing long term care, health care, long-term care, seniors by Admin | No comments

Two key votes relating to the Community Living Assistance Services and Supports (CLASS) Act occurred today in the U.S. Senate.

With a 98-to-0 vote, senators approved an amendment from Sen. Sheldon Whitehouse (D-R.I.) that would require surplus funds from CLASS to remain in the program.

Right after that vote, senators voted 51 to 47 to withdraw an amendment from Sen. John Thune (R-S.D.) that would have stripped the bill of the CLASS Act provision.

Opponents, who needed 60 votes to pass the amendment, allege that the CLASS plan would add another unaffordable program on to a government already in over its head with debt.

According to the AP, Thune said that the CLASS plan would lock in future generations to “deficits and debts as far as the eye can see.”

However, Sen. Chris Dodd (D-Conn.) told the Senate that the CLASS Act is “a very creative idea of using individuals’ money to contribute to their own long-term financial security if they’re faced with disabilities.” Dodd added, “It is a solid program that can make a huge difference for millions of Americans, allowing them to lead independent lives with dignity.”

Stay tuned for more updates.

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Sen. Kirk Addresses Senate About CLASS Act

December 4, 2009 in Medicare, health care, long-term care, policy, politics, seniors by Admin | No comments

Earlier today, Sen. Paul Kirk Jr. (D-Mass.) addressed the Senate about the Community Living Assistance Services and Supports (CLASS) Act provision of the Patient Protection and Affordable Care Act (H.R.3590). Below is the transcript of Kirk’s speech (thanks to the Political Intelligence blog):

Sen. Kirk’s Speech
Currently, long-term care, as we know it, is paid for through a fragmented combination of sources, including family budgets, Medicaid, Medicare, and private insurance. Without a prior and voluntary insurance investment, which the CLASS act offers, paying for long term care can be financially catastrophic for many individuals and families, since home care and nursing homes can cost over $70,000 a year. Only one in five individuals can afford private long term care insurance, and many are excluded because of pre-existing conditions. Medicare’s role in providing long-term services is extremely limited, covering only short-term skilled nursing care and home health. This lack of options forces many people to turn to Medicaid, which is our nation’s primary payer and only safety-net program providing comprehensive long-term care services and supports.

But who is eligible for Medicaid? People only qualify for Medicaid if they are, or become, poor, which forces many families to impoverish themselves to obtain the support they need. We have all heard the stories.

Persons work hard all their lives, and then, due to an accident, they cannot afford to pay for needed services and supports out of pocket. So they now must give up their savings to become eligible to turn to the government and Medicaid to provide the proper care they need to survive.

No one wins. Not the disabled or elderly parent. Not the family care giver. Not the government and not Medicaid.

The CLASS Act will help turn this serious no win situation into an everyone wins result. It gives individuals with disabilities and their families the funds they need to obtain some of the services they need, without having to resort to Medicaid. The current reliance on Medicaid is not only a strain on families — it is also a strain on our already overburdened Medicaid system. Today, Medicaid spends nearly $50 billion a year on long term services and supports – in 2007, Massachusetts spent over $3 billion on long-term care. Estimates indicate that by 2045, that national spending could exceed $200 billion. Obviously, the current course is unsustainable.

In addition, the private insurance industry is not doing enough to meet the growing demand for such care. Aging Baby Boomers and longer life spans will increase the demand for long-term care dramatically for decades to come. Yet, 95% of people over 45 do not have private Long term care insurance, and fewer and fewer people are able to buy such coverage. Make no mistake — as it stands today, if someone without adequate long term care coverage becomes disabled, they will more than likely have to turn to the already overburdened Medicaid system to get the help they need.

The CLASS Act is designed specifically to remedy this looming crisis. By giving people an affordable option other than Medicaid, the act will save the system over $1.6 Billion over the first four years that people start receiving benefits. Some opponents of the CLASS Act argue that the program will not be sustainable over time, and that it will become insolvent and end up costing taxpayers large amounts. That argument could not be further from the truth.
Let’s give proper credit where it is due. With the help of our friends on the other side of the aisle, we have taken real steps to ensure that the program remains solvent for years to come.

The act establishes a strong work requirement, to make sure that funds continue to come into the program from the payroll tax deduction or from an individual’s voluntarily paid premium. It requires the Secretary of HHS to review and set the premiums annually to ensure that the program will remain solvent for the next 75 years. It directs the secretary, in addition, to review the cost projections 20 years into the future. And, finally, it mandates that no taxpayer funds will be used to pay benefits. Let me repeat that final point, since I have often heard it misrepresented by opponents of the program: no tax payer funds will be used to pay benefits. Benefits will be paid through self-funded and voluntary premiums.

During the markup in the HELP Committee this summer, Senator Dodd led a major discussion about this program. With the help of the Republicans on the committee, especially Senator Gregg of New Hampshire, additional safeguards were included to ensure that the act will stand on strong financial footing for years to come. After the Committee adopted Senator Gregg’s 75-year amendment, the program won strong words of support from both parties. In fact, Senator Gregg published an op-ed praising the program in the July 20th issue of Roll Call.

In short, the CLASS act creates a voluntary, self-funded insurance plan that is a cost saver for Medicaid.

It puts the money and the power to decide for themselves in the hands of those directly affected – the individual and their loved ones. It keeps people productive in the community and their families financially sound. The CLASS Act has the potential to help millions of individuals, families and businesses across the country by allowing them to make an investment in their future and determine the quality of life they want to lead.
The CLASS Act is a realistic answer to the serious problems of our current system. It enjoys strong support from the White House and from hundreds of disability groups throughout our nation. More importantly, it provides financial and health security to the lives of millions of Americans. Disability could suddenly strike any of us in the years ahead. As we work to provide health insurance to the tens of millions of Americans who do not have it, it makes no sense to ignore the needs of millions of people with disabilities and the elderly, who desperately need our help.

I hope very much that our colleagues will support the CLASS Act as part of the current health reform bill, and I look forward very much to its enactment.

SUMMARY OF PROGRAM

The Need for the CLASS Act
Long-term supports and services are an area that is not currently affordable or accessible for millions of Americans. Approximately 5 million people under age 65 living in the community have long-term care needs. There are more than 70,000 workers with severe disabilities in the nation today who need daily assistance to maintain their jobs and their independence. Many of the people that need long term services and supports rely on unpaid family and friends to provide that care. Demographic trends suggest that these sources of support will be increasingly scarce in the coming decades. Therefore, paid assistance will be increasingly needed by people with disabilities.

It is estimated that 65% of those who are 65 today will spend some time at home in need of long-term care services – which costs on average almost $18,000 per year. Currently one and a half million people are in nursing homes. Approximately 9 million elderly Americans will need help with activities of daily living (ADLs) or intermediate activities of daily living (IADLs) during the current year – and by 2030 that number will increase to 14 million.

However, contrary to popular belief, Medicare and most private health insurance only pay for long-term care for a short period of time, meaning that most people pay out of their own income or assets. Those with the most intense needs will frequently exhaust their assets and rely on Medicaid. Through the CLASS Act, a new voluntary long-term care services insurance program will provide a lifetime cash benefit that offers seniors and people with disabilities some protection against the costs of paying for long term services and supports, and it helps them obtain services and supports that will enable them to remain in their homes and communities.

How the Program Works
CLASS is a voluntary, self-funded program for people who are currently employed. Affordable premiums will be paid through payroll deduction, if an individual’s employer decides to participate in the program. In this case, people who do not want to participate may opt out of the program. Self-employed people or those whose employers do not offer the benefit will also be able to join the CLASS program. Participants must pay premiums for five years and work for 3 years in order to qualify for benefits.

One of the ways the CLASS program is unique is that it relies less on medical underwriting than do most private insurance plans. All working Americans can participate in the CLASS program. The conditions for qualifying for benefits are the same as those commonly used in private insurance plans – when participants in the program need help with a set number of activities of daily living, they will be assessed and, if eligible, start receiving benefits.

The CLASS Act seeks to empower consumers. Individuals usually know best which services and goods they need to stay independent. Yet they can also use help navigating the complicated health and long term services market place. For these reasons the CLASS Act provides an average cash benefit of $75 per day, so that participants have the most flexibility to meet their own needs. The actual cash benefit will depend on a person’s level of impairment. Counseling, coordination and advocacy services to facilitate the receipt of high quality services will be available to every beneficiary.

Actuarial Framework
CLASS is a program that stands on its own financial feet. It is not a government entitlement program and it does not affect receipt of or eligibility for other benefits, such as Social Security, SSI or SSDI. If an individual uses Medicaid services, the CLASS benefit will be used to offset part of the cost of community based, residential or nursing home care.

Voluntary long term care insurance poses challenges for establishing a solid financial structure. Early formulations of the CLASS Act faced concerns over its financial viability. Through constructive interaction with the industry and other interested parties, several changes in the program were made to address those concerns. First, spouses are not eligible as dependents, decreasing the amount of adverse selection possible in enrollment. Second, the Secretary of HHS has flexibility in premium determination to ensure 75 year solvency, and flexibility in setting eligibility requirements for the receipt of the cash benefit (either 2 or 3 ADLs). Third, premiums are age-rated.

All told, these changes ensure that the CLASS program is financially viable and self-sustaining long into the future.

The Participation Question
In its modeling assumptions, the Congressional Budget Office assumes a 5% participation rate in the CLASS program, following current participation rates for private long-term care insurance. However, there a number of sound reasons to believe that participation in the CLASS program will be substantially higher than the 5% figure – which would further strengthen the financial outlook for the program.

First, the benefit in the CLASS program is a cash benefit, rather than a service-based payment. The ability to flexibly address one’s own needs by purchasing anything from a caregiver’s services to orthotics to a shower chair will make this program more attractive to consumers than traditional long-term care insurance. This is expected to translate into higher participation rates.

Second, the CLASS program is a lifetime benefit. In contrast, only 4% of group long-term care insurance products and 20% of individual long-term care insurance products have a lifetime benefit. As a lifetime cash benefit, this program will generate increased interest and participation.

Third, the CLASS program, unlike private long term care insurance, entails the ease of autoenrollment and payroll deductions for premiums. While the program maintains its voluntary nature through an employee opt-out, the autoenrollment feature will increase participation levels above that expected for proactive enrollment, a trend that has been demonstrated with 401(k) plans, and that underlies automatic enrollment in the Federal Employees’ Group Life Insurance (FEGLI) plan, where enrollment rates are 84%.

Fourth, government endorsement of the plan could be expected to increase participation. The Long Term Care Partnership Program, for instance, found that people who enrolled in private long term care insurance plans reported that the endorsement of the State was an important factor in the decision to purchase.

Long-Term Savings
Beyond being a self-supporting voluntary program, the CLASS Act program can be expected to generate long-term savings in Medicaid. First, there is the direct offset of the $75 daily benefit which is applied towards any Medicaid long term care costs. But beyond that, the CLASS program will help people live independent lives at home and in the community. When people with disabilities get the services they need, they are less likely to enter a nursing home or hospital.

The average $75 daily cash benefit in the CLASS program – which is the equivalent of $27,375 a year – could certainly enable someone to purchase services in the community, delaying and avoiding more expensive institutional care. In fact, the cash benefit is larger than the average yearly cost of home health services ($18,000). Based on 2008 caregiver prices, $75 a day can purchase 2 ½ hours of daily service from a home health aide, 4 hours of daily service from a homemaker, and cover all of the daily cost of an Adult Day Care Center.

While the CLASS program is innovative – and therefore without exact precedent – there are examples and systematic evidence that demonstrate the ability of community-based services to avoid or delay more expensive care in an institution. One study showed that the “Cash and Counseling” program, which provides a cash benefit towards home health services, reduced nursing home use 18% over 3 years. Another study of expansions of home and community based services through Medicaid waivers from 1995 to 2005 revealed that states with high spending on Medicaid HCBS had 15 percent less Medicaid spending on nursing home care than states with low spending on HCBS. As a result, expansion of HCBS entailed a reduction in institutional spending, and long-term cost savings after the initial investment in establishing community services.

A driving force behind entry into a nursing home is caregiver stress. It has been estimated that eliminating high caregiver stress would prevent 73,900 long-stay nursing home admissions over a two year period (roughly one quarter of all long stay nursing home admissions). Providing acash benefit under the CLASS program to enable people to buy additional caregiver services could therefore be expected to avoid admission into a nursing home.

A consumer-directed benefit like that set out in the CLASS program has the additional advantage of increasing consumer satisfaction with services. When consumers directly hire their caregivers (as is the case with a cash benefit), both the consumer and care worker report higher rates of satisfaction, making home-based care through a consumer-directed approach a sustainable alternative for institutional care.

For all of these reasons, the CLASS program can be expected to generate long-term savings, while also enabling a growing older and disabled population to maintain functional lives in their homes and communities.

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