A memorandum issued by the Department of Health & Human Services projects the new, voluntary Federal long-term care insurance program will need to charge participants $2,160-per-year and still expects that adverse selection will make the program unsustainable.
The report by Richard Foster, Chief Actuary of the Centers for Medicare and Medicaid Services, summarized the financial and coverage effects of the America's Affordable Health Choices Act of 2009 (HR 3962) that was passed by the U.S. House of Representatives. Senators are now debating their version of health care reform.
The legislation contains a provision providing for the establishment of a federal long-term care insurance plan that would be offered starting in 2012. The program will be financed by participants who would have costs deducted from paychecks.
According to Jesse Slome, executive Director of the American Association for Long-Term Care Insurance, the only individuals who will likely pay the costly premium are those in poor health who expect to receive benefits from the plan. "Even then, they will have to pay continuously for five years before they are eligible to collect what amounts to a very modest benefit," Slome notes.
The report by the government actuaries note a net Federal savings for the CLASS program during the initial years of operation. "That assumes at least three million people are willing to pay the costly premium," Slome notes. "If fewer people participate, or the government lowers the cost to make the plan more attractive, the savings will be less and the deficit in anticipated income to pay for the new entitlement plan will be larger that anticipated."
The HSS report notes that, "in general, voluntary, unsubsidized, and non-underwritten insurance programs such as CLASS face a significant risk of failure as a result of adverse selection by participants." While to Congressional bill calls for the program to be solvent throughout a 75-year period, the report concludes "there is significant risk of adverse selection making the CLASS program unsustainable."
Written by Mindy Hartman
Los Angeles, CA
Exclusive to HULIQ.com
Comment and add to the story without registration, but keep the comments meaningful please. Links are not accepted.
