BRILLIANT SALLY PIPES: LOW CLASS TRICKERY IN HEALTHCARE BILL
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=516027
Hike In Long-Term Care Benefits Is Really Just Low-CLASS Trickery
By SALLY C. PIPES
The extent of smoke and mirrors in both the House and Senate health care bills is frightening. Much mischief is easily concealed in each 2,000-plus-page bill.
One part of the health reform bills that has not garnered much attention is Congress’ expansion into long-term care.
Just a few months ago, this act alone would have been treated for what it is — a massive government expansion that bodes ill for the fiscal health of the country.
The Community Living Assistance Services and Supports Act of 2009 — or CLASS Act — is being touted as a federal long-term care plan. Uncle Sam will use his collective might to ease the increasing burden of aging. In reality, it is a budget device designed to shift dollars to health care spending even as it builds an infrastructure for long-term bureaucratic growth.
Nothing New
The offer is a federally chartered long-term care benefit — a modest payment to offset the costs of retrofitting a senior’s home and paying for someone to stop by and help with activities of daily living.
Americans would pay premiums, the government would administer the program, and — we’re to believe — the specter of losing one’s life savings and dignity to old age will be relegated to the past.
If such an innovative program sounds familiar, it’s because it is. The description is long-term care insurance, which has been available in the private market for many years.
When we analyze the government’s promised version, it’s not clear that the CLASS program offers any advantages, other than those afforded politicians looking to raise revenues and their own profiles.
The program would collect premiums for five years before a recipient receives a benefit. No private insurance company that currently offers long-term care insurance would ever be allowed to offer such a product. Yet this is not considered a defect in Uncle Sam’s plan — it’s the entire objective.
Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi would use the five years of projected premiums — between $41 and $58 billion — to subsidize future out-of-control spending on health plans, which are projected to cost between $848 billion and $1 trillion over 10 years.
Sen. Max Baucus said recently that he estimates the final plan will cost about $2.5 trillion, which is much more likely than the lower figures.
Politicians claim the plan will be self-supporting, but the CBO projects that by its third decade, the government-run long-term care program will be adding “tens of billions of dollars” to the budget deficit.
In other words, it will be yet another unsustainable government program.
The reality is it will probably be in deficit even sooner. It’s not clear who will sign up.
The estimated daily benefit of $50 to $75 a day for a premium of $123 a month is more expensive than plans currently offered in the private sector. A 50-year-old living in Ohio, for example, can obtain a $50-a-day policy for $70 a month. A 60-year-old can get the plan for $96.
The private sector screens out unhealthy risks and insures from day one, giving healthy people an incentive to repair the roof while the sun is shining.
The federal government will take anyone but make everyone pay more and then wait five years to collect. This is a deal that will only attract the unhealthy.
It’s not clear what the purpose is other than to lay the foundation for more government encroachment into the private marketplace and, of course, to collect taxes for the overhaul of America’s health care system.
Meager Daily Rations
The CBO estimates a whopping 4% of the population would use the program within a decade, which translates to 10 million people.
Eight million Americans currently own private policies, the vast majority of which offer far more protection than $50 a day. The government’s $50 a day is not nearly enough to put a dent in expensive taxpayer-supported nursing home care.
Sharing a room in a nursing home costs $198 a day. Home care is $21 an hour.
That’s why only 15% of private plans reimburse less than $100 a day.
The CLASS Act’s purpose is to provide a staging ground for a more grandiose government program. Already, fans of government are calling for the program to be mandated.
Just what Americans need — something else for which politicians force us to spend our own money.
• Pipes is president & CEO of the Pacific Research Institute and author of “The Top Ten Myths of American Health Care: A Citizen’s Guide.” Follow her on Twitter @sallypipes.
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