Kirsten J. Colello
Specialist in Health and Aging Policy
Janemarie Mulvey
Specialist in Health Care Financing
Under current law, the majority of paid long-term services and supports (LTSS) are funded by public programs, such as Medicaid and Medicare. However, these programs are limited in scope and continue to face increased financial pressures. Although private long-term care (LTC) insurance is available to provide some financial protection against an individual’s risk of the potentially high cost of LTSS, fewer than 10% of individuals aged 50 and older own such a policy. Thus, for the majority of older Americans, the out-of-pocket cost of obtaining paid help for these services may far exceed their financial resources. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) initially established a federally administered voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program. The stated purpose of the CLASS program, among other things, was to provide a financing mechanism for long-term care services that supports personal choice and independence to live in the community. However, a number of concerns were raised about the long-run sustainability of the program and as a result on October 14, 2011, the Department of Health and Human Services (HHS) sent a letter to Congress stating that after careful examination of how the Administration might implement a long-term financially stable CLASS program, HHS did not see a viable path forward for implementation at that time.
With administrative implementation of the CLASS program stalled, the 112th Congress took legislative action to repeal the CLASS program provisions under the ACA. On January 3, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240). Among its provisions, Sec. 642 of ATRA repealed Title XXXII of the Public Health Services Act entitled “Community Living Assistance Services and Supports” (CLASS). In doing so, it also made certain conforming statutory changes to the ACA by repealing Title VIII related to the CLASS program and certain provisions in Medicaid statute (Title XIX of the Social Security Act). Sec. 642 also rescinded the unobligated balance of ACA’s funds to the National Clearinghouse for Long Term Care Information (ACA had provided $3 million in mandatory funding for each of fiscal years 2011 through 2015 for this activity).
Despite the repeal of the CLASS program provisions, and with it the establishment of a voluntary federally administered long-term care insurance program, the issue of comprehensive long-term services and supports (LTSS) reform will likely be of consideration in the 113th Congress. Within 30 days of enactment, Sec. 643 of ATRA established a Commission on Long-Term Care (LTC). The new LTC Commission, composed of 15 members representing the interests of certain LTSS stakeholders and organizations, will be appointed by the President and other specified congressional leaders. The commission is required to develop a plan and legislative recommendations for the establishment, implementation, and financing of a LTSS system.
This report first discusses the cost and financing for LTSS and the current market for private LTC insurance. It then details the various CLASS program requirements, which, although now repealed, may remain of interest to Congress and are relevant to ongoing discussions of LTC proposals. Finally, it provides a discussion of the long-run sustainability concerns and the status of administrative implementation.
Date of Report: February 13, 2013
Number of Pages: 21
Order Number: R40842
Price: $29.95
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