Nevada Representatives to the 112th Congress, Mark Amodei and Joe Heck, voted to bring the repeal of the CLASS Act to the House floor on January 31, 2012. [roll call 12] Then, on February 1, 2012 at 7:06 p.m. they voted in favor of H.R. 1173, an act to repeal the CLASS Act. [roll call 18] Nevada Congresswoman Shelley Berkley (D-NV1) voted against the repeal. And, what would this do?
H.R. 1173 “Repeals provisions of the Public Health Service Act enacted under the Patient Protection and Affordable Care Act (entitled the Community Living Assistance Services and Supports Act or the CLASS Act) which establish a national, voluntary insurance program for purchasing community living assistance services and supports in order to provide individuals with functional limitations with tools that will allow them to maintain their personal and financial independence and live in the community.” [CRS] (emphasis added)
“Congressman Amodei said, “I think that this is the tip of the iceberg when it comes to just how untenable the President’s health care law is. Even the Democratic chairman of the Senate Budget Committee called the CLASS Act ‘a Ponzi scheme of the first order, the kind of thing Bernie Madoff would be proud of.’
“More damning still is that the fuzzy math from the CLASS Act was crucial to garnering support for Obamacare, which was passed by the skin of its teeth using parliamentary tricks. I hope that is measure is merely the first step towards complete repeal of the President’s ill-conceived takeover of our health care system.” [News4]
Representative Amodei’s language is a bit strong. No, the portion of the health care reform bill which addressed assisted living for the elderly was not a Ponzi Scheme Bernie Madoff would be proud of.” However, yes the Department of Health and Human Services could not find a way to implement the program by October 2011. [Sebelius Letter] Rather than puerily dismissing the issues with CLASS implementation as “Ponzi Scheme,” intelligent observers should note there were real issues with implementation:
This discussion covered five significant enrollment issues: (1) opt out and payroll deductions; (2) alternative enrollment processes; (3) penalties for lapsing; (4) delays in CLASS enrollment; and, (5) the definition of active employment. The group noted that both CBO and the Business Roundtable had identified the issue that the law mandated automatic enrollment only for employees whose employer had elected to participate in CLASS and that it was not likely that many employers would do so.
Other options for enrollment such as employers offering information or a yes/no choice were discussed. Group members analyzed the implications of policy holders lapsing, or skipping multiple payments. Thus, individuals could strategically (and legally) “game” the program, threatening financial stability.
The group considered a variety of strategies for addressing the lapsing issue. The group also considered different ways to approach the earnings requirement during the vesting period. The group discussed whether individuals would be required to pay premiums while in benefit status.
In an early meeting with representatives from the IRS, HHS officials learned that the IRS code had not been amended to cover payroll deductions for CLASS premium payments so that the protections that addressed the potential failure of employers to pay money withheld from other payroll deductions would not apply to the automatic withholding of CLASS premiums. Enrollment options were discussed to address this concern. [HHS Report]
Either Representative Amodei didn’t understand the enrollment and tax status issues, or he didn’t think his constituents were sufficiently intelligent to grasp the information given above, so he resorted to “code wording” (Ponzi, Madoff) instead of fully explaining.
Perhaps Representative Amodei did read the HHS Report, but decided not to discuss the part where one of the major problems with marketing the voluntary plans was created by threats of litigation to close the program — and then “what to do withe people who were already enrolled?” Nor does Representative Amodei tell his constituents that the tenuous nature of Congressional appropriation support for the CLASS Act provisions also impeded implementation. [HHS Report, Section 2, Overall Analysis]
Nor did Representative Amodei mention that the bill contained something of a “poison pill” inserted at the behest of former Senator Judd Gregg (R-NH) that the program be fiscally viable and self supporting for 75 years into the future. [NatlJ] As with the Post Service pension fund, the GOP has decided that self supporting “viability” must be demonstrated for enrollees who have not yet been born.
Quite certainly, Congressmen Heck and Amodei did not favor their constituents by explaining the four categories of options explored by the Department of Health and Human Service (HHS Report Table 1] Nor did they get around to the part where the individual mandate (originally a GOP idea) was necessary to sustain the program. [HuffPo]
Perhaps the Magic Markets are supposed to rectify the problems associated with financing long term assisted living expenses, because as the Department of Health and Human Services explains we do have a problem:
“There is a critical need to find ways to help Americans prepare for their long-term care needs. Almost seven out of ten people turning age 65 today will experience, at some point in their lives, functional disability and will need some paid or unpaid help with basic daily living activities. While most people who need long-term care are in their 70s and 80s, young people also can require care, with 40 percent of long-term care users today between the ages of 18 and 64.
Long-term care is also expensive. While costs for nursing home care vary widely, they average about $6,500 per month, or anywhere from $70,000 to $80,000 per year. People who receive long-term care services at home spend an average of $1,800 per month. Expected lifetime long-term care spending for a 65 year old is $47,000; sixteen percent will spend $100,000 and five percent will spend $250,000. Medicare does not cover long-term care services. Medicaid pays for such services only for people with limited financial means; qualifying for Medicaid often means exhausting all other resources.
Furthermore, few private mechanisms are available to help people plan ahead to pay for their future care. Long-term care insurance, by far the most popular private option available, can be costly and difficult to purchase for those with pre-existing health conditions or disabilities. Only about 2.8 percent of Americans have a policy. For workers who already experience a disability and a need for long-term services and supports, the options are even fewer.”
What is obvious from the HHS analysis is that long term care is expensive, Medicare doesn’t cover it, and the elderly must exhaust their resources into poverty before qualifying for Medicaid. It is also readily apparent that the private insurance companies aren’t much interested in marketing the policies since only 2.8% of our population have purchased them.
Once more, the Haves and the Have Mores can afford long term care insurance without exhausting their resources, the Have Somes and Have Lesses not so much. Message Taken: If you are in the top 1% you don’t have a problem, and if the 1% doesn’t have a problem then there’s no reason to look for a solution, or to address the enrollment, funding, and litigation issues (created by the Republicans themselves). The GOP kill strategy is effective: Attack the individual mandate provisions which would have made the program more fiscally sound, and then declare the program should be repealed because (drum roll insertion) it isn’t fiscally prudent.
Any way you cut it the 1% win. And, any way you cut it the voters in the 2nd Congressional District of Nevada deserved a better, less flippant, explanation.