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Long-term health care program gains in House

House health care legislation expected within days is likely to include a new long-term care insurance program to help seniors and disabled people stay out of nursing homes, senior Democrats say.
/ Source: The Associated Press

House health care legislation expected within days is likely to include a new long-term care insurance program to help seniors and disabled people stay out of nursing homes, senior Democrats say.

The voluntary program would begin to close a gap in the social safety net overlooked in the broader health care debate, but it must overcome objections from insurance companies that sell long-term care coverage and from fiscal conservatives.

"I'm pretty confident that it will be in there," Rep. Frank Pallone, D-N.J., a leading sponsor, said of the provision.

More than 10 million people currently need long-term care services, a number that's only expected to grow as the baby boom generation ages. But most families whose elders can no longer care for themselves have to scrape to find a solution.

The cost of nursing homes averages $70,000 a year, and a home care attendant runs about $29 an hour. Medicare only covers temporary nursing home stays. Middle-class households have to go through their savings before an elder can qualify for nursing home coverage through Medicaid.

The new proposal is called the Community Living Assistance Services and Supports Act, or CLASS Act, and passing it was a top priority for the late Sen. Edward M. Kennedy, D-Mass. The Obama administration also has said it should be part of health care overhaul legislation.

In return for modest monthly premiums while they are working, people would receive a cash benefit of at least $50 a day if they become disabled. The money could be used to pay a home care attendant, purchase equipment and supplies, make home improvements such as adding bathroom railings, or defray the costs of nursing home care.

The Congressional Budget Office has estimated that the program — financed by premiums_ would be fiscally solvent over a 75-year period. That calculation assumes an initial monthly premium of $123 and a $75 daily benefit. People would have to pay premiums for five years before they could qualify for benefits. Premiums and benefits would be adjusted annually for inflation.

According to the budget office, the program would take in more money than it pays out over its first 10 years, reducing the federal budget deficit on paper by about $73 billion. That makes it an attractive option for lawmakers trying to shoehorn a major expansion of health insurance coverage into the 10-year, $900 billion limit set by President Barack Obama.

A House Democratic leadership aide said top Democrats are leaning toward including the long-term care plan in the House bill. There is strong support among Democrats in the House to do it, said the aide, who spoke on condition of anonymity because no final decision has been made.

"Many members want to find a way to include this in the bill and I appreciate the strong support," said Rep. John Dingell, D-Mich., also a sponsor.

In the Senate, the situation is uncertain. The CLASS Act is part of the Health, Education, Labor and Pensions Committee bill, but the Finance Committee passed on it. Majority Leader Harry Reid, D-Nev., has not said whether he'll include it in the final, combined version.

Supporters of the program say it wouldn't crowd out private long-term care insurance, since the public benefit would be modest when compared with the cost of services, whether in one's own home or in a nursing center.

"It's a little bit like Social Security, since most people you don't just want to live on Social Security alone," said Paul Van de Water, a senior policy analyst with the Center on Budget and Policy Priorities. "This could be viewed as a base, but it's not the whole thing. If private insurers want to sell products that would supplement it, that market would still be available." The center advocates for low-income people.

But the American Council of Life Insurers says a federal insurance program would only create confusion among consumers.

"Many people already believe Medicare is going to cover their long-term care needs, and as a result they don't plan," said Whit Cornman, a spokesman for the industry group. The CLASS Act would only add to the false sense of security.

Insurers say the initial low premiums for the program would rise over time, making it unattractive for healthy working age people to keep contributing. Eventually, they warn, it would need a taxpayer bailout.

For now, Democratic moderates in the Senate are concerned the CLASS Act will promote budget shenanigans. Since the long-term care fund would be in the black over its first 10 years, the moderates say its inclusion in the health care overhaul package would serve to mask the true costs of expanding medical coverage.