Obama pulls plug on CLASS program

Long-term care includes not only nursing homes, but such services as home health aides for disabled people.

Targeted by congressional Republicans for repeal, the program on Friday became the first casualty in the political and policy wars over the health care law. It had been expected to launch in 2013.

“This is a victory for the American taxpayer and future generations,” said Republican Sen. John Thune, spearheading opposition in the Senate. “The administration is finally admitting (the long-term care plan) is unsustainable and cannot be implemented.”

Proponents, including many groups that fought to pass the health care law, have vowed a vigorous effort to rescue the program, insisting that Congress gave the administration broad authority to make changes.

Known as CLASS, the Community Living Assistance Services and Supports program was a long-standing priority of the late Massachusetts Democratic Sen. Edward M. Kennedy.

Although sponsored by the government, it was supposed to function as a self-sustaining voluntary insurance plan, open to working adults regardless of age or health. Workers would pay an affordable monthly premium during their careers and could collect a modest daily cash benefit of at least US$50 if they became disabled later in life. The money could go for services at home or to help with nursing home bills.

But a central design flaw dogged CLASS. Unless large numbers of healthy people willingly sign up during their working years, soaring premiums driven by the needs of disabled beneficiaries would destabilize it, eventually requiring a taxpayer bailout.

After months insisting that could be fixed, Health and Human Services Secretary Kathleen Sebelius finally acknowledged Friday she doesn't see how.

“Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time,” Sebelius said in a letter to congressional leaders.

The law required the administration to certify that CLASS would remain financially solvent for 75 years before it could be put into place. But officials said they discovered they could not make CLASS both affordable and financially solvent while keeping it a voluntary program open to virtually all workers, as the law also required.

Monthly premiums would have ranged from US$235 to US$391, even as high as US$3,000 under some scenarios, the administration said. At those prices, healthy people were unlikely to sign up. Sebelius said the administration wants to work with Congress and supporters of the program to find a solution.

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