Affordable Care Act and Long Term Care Insurance

Affordable Care Act and Long Term Care Insurance

By any metric, Americans are under-insured when it comes to Long Term Care coverage.  Long Term Care planning is of growing concern in the larger healthcare debate as baby-boomers race towards retirement.  Ultimately, social scientists expect a dramatic increase in the need for Long Term Care services at a national level, and on an unprecedented scale. Uncertainty in the Long Term Care Insurance market is amplified by inconsistent government actions and general consumer confusion about what’s covered and what’s not.

Long Term Care Heat Map of the United States

Heat Map: Demand for Long Term Care Insurance, by State.

Does the Affordable Care Act Address Long Term Care?

Short Answer: No.

Long Answer: The original bill included legislation originally introduced by the late Ted Kennedy, known as the CLASS Act.  The Community Living Assistance Services and Supports program (CLASS Act) has been effectively disabled as of 2012 by the Obama administration, but the legislation has not been formally removed from the ACA.  A 2010-era brief (read: dated) on the provisions the Act was supposed to have can be found here.  Because the Class-Act had to be actuarially sound for 70-years, it has been abandoned by the Secretary of Health and Human Services until it’s failings can be addressed.

What went wrong with the CLASS Act?

Short Answer: It failed as it was designed to.

Long Answer: Despite its obvious inadequacies, The CLASS Act was included in the health reform bill for one simple reason: it helped reduce the cost of the bill by hundreds of billions of dollars.  CNN reports that the first decade savings were estimated at $80,000,000,000.

When the CLASS-Act was allowed to be scored by the CBO as part of the Affordable Care Act, it was responsible for $80B in “positive” revenue for the Act.  Ultimately, the savings helped get the Act passed.  Hence, it was included but designed to be ditched or re-tooled later.

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