It’s time to start over on long-term care

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The need for universal and comprehensive insurance for long-term services and supports remains critically important. Nursing home care costs an average of $70,000 per year. Home care costs an average of $19 per hour. Paying for either over an extended period of time is beyond the financial ability of most people.
 
Aging is inevitable, but the need for expensive long-term care is a risk that can be insured against. Half of individuals turning 65 will spend nothing on long term care while a little more than 5 percent are projected to spend $100,000 or more. While everyone ages, we don’t know in advance whether our long-term care costs will be negligible or catastrophic.
 
What are the lessons from the inability to implement CLASS?
 
First and foremost, there needs to be near universal participation for social insurance to succeed. CLASS was voluntary and the Obama Administration understood all too well that adverse selection would force premiums much higher than the vast majority of people would pay. As Bob Ball, one of the founders of Social Security, wrote in 1998 “a voluntary system simply wouldn’t work…With a compulsory program, the problem of adverse selection – individuals deciding when and to what extent they want to participate, depending on whether their individual circumstances seem favorable – is avoided.” Ironically, CLASS failed because it lacked the mandatory participation found elsewhere in the Affordable Care Act.
 
This lesson is not lost on the rest of the industrialized world. For years, the United States and the United Kingdom were the only two developed nations not to go this route. We may soon be alone. The United Kingdom is now considering caps on individuals’ long-term care expenses. Other industrialized countries appear to do a better job than we do in balancing human needs, fiscal responsibility and economic growth.
 
The likely end of CLASS also raises questions about the scope of benefits, the role of the private sector and personal responsibility. The analysis from Georgetown University by Judy Feder, Harriet Komisar and Robert Friedland may provide the best starting point for a discussion of future options for long term care.
 
As one advocate remarked, CLASS was “legislative lightening in a bottle” – a quirk of Congressional Budget Office scoring that passed unexpectedly without much public notice and thus without much public support. That was the other fundamental flaw. We must build a long-term care policy that has enough public visibility to generate support so that this doesn’t happen again. Otherwise we are like Charlie Brown kicking at the football, only to be surprised when, once again, it is pulled away.
 
Lee Goldberg is Vice President for Health Policy at the National Academy of Social Insurance (NASI). Prior to joining NASI, he managed long-term care policy initiatives for the Service Employees International Union (SEIU).