Federal Long Term Care Insurance Plan Closer To Repeal

The deficit-reduction proposal released Tuesday by the reconvened Gang of Six would repeal the Community Living Assistance Services and Supports Act (known as the CLASS Act).

Created as part of health reform legislation passed last year by Congress political experts refer to the CLASS Act as one of the late Sen. Ted Kennedy’s most cherished programs. It is also a favorite target of Republicans.

"America is facing a future long-term care crisis as the aging population balloons," explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the insurance industry's national trade group. "CLASS has been highly controversial because on one hand it is at least some effort to address the problem though many see it as a very costly future new taxpayer-borne entitlement program."

The President-appointed fiscal commission led by former Senators Alan Simpson and Erskine Bowles singled the CLASS Act out as an “unsustainable” entitlement that would most likely saddle taxpayers with a major new liability, a finding that deficit hawks have latched on to in their attacks.

"Despite the fatal flaws of the CLASS Act, the Obama administration continues to push ahead in implementing this unsustainable entitlement program,” Sen. John Thune (R-S.D.) said in a statement last week. He added that the Department of Health and Human Services is ignoring “all of the red flags raised by the massive new entitlement program that is being created.”

CLASS establishes a voluntary long-term disability insurance program that would pay disabled enrollees a cash benefit for assistance with basic daily living activities such as dressing, bathing and eating. The insurance would be offered through the workplace, where employers who agree to participate would sign up their employees automatically — but also give them a chance to decline the coverage. If they keep the coverage, they’d be able to use the benefits after they’ve paid the premiums for five years.

CLASS Act critics including many leading industry actuaries with decades of experience in pricing and marketing long-term care insurance products argue that the voluntary CLASS program is vulnerable to adverse risk selection. "Critics expect that primarily health-challenged people will sign up for CLASS, those with expensive health problems which means CLASS would not be sustained by premiums alone," Slome explains. "Or, if they artifically price it too low in order to attract more healthy individuals, you face a serious shortfall when they ultimately go on claim."

Some of these problems were intended to be worked out before the Affordable Care Act was passed, but because of its unusual route to becoming law, that never happened experts acknowledge. "The nation definitely needs to discuss how to handle providing care for aging Americans," Slome concludes. "Kicking the can down the road isn't going to keep people from growing older and needing costly long-term care."

To learn more about the CLASS Act visit the American Association for Long-Term Care Insurance website at http://www.aaltci.org/class.

Calorie Intake Linked To Longevity And Cancer Development

Cutting consumption of glucose, the most common dietary sugar, can extend the life of healthy human cells and speed the death of precancerous cells, reducing cancer's spread and growth rate.

According to findings reported by researchers from the University of Alabama at Birmingham, reducing calorie-intake can benefit longevity and help prevent diseases like cancer that have been linked to aging.

The researchers conducted tests by growing both healthy human-lung cells and precancerous human-lung cells in laboratory flasks. The flasks were provided either normal levels of glucose or significantly reduced amounts of the sugar compound, and the cells then were allowed to grow for a period of weeks. Restricted glucose levels led the healthy cells to grow longer than is typical and caused the precancerous cells to die off in large numbers.

Every year some 1.4 million Americans are diagnosed with cancer. It ranks as one of the leading factors for the need for costly long-term care according to the American Association for Long-Term Care Insurance among aging seniors.

Two key genes were affected in the cellular response to decreased glucose consumption. The first gene, telomerase, encodes an important enzyme that allows cells to divide indefinitely. The second gene, p16, encodes a well known anti-cancer protein.

Healthy cells saw their telomerase rise and p16 decrease, which would explain the boost in healthy cell growth, the researchers explained. The research into the links between calorie intake, aging and the onset of diseases related to aging is thought to be a first of its kind given that it used the unique approach of testing human cells versus laboratory animals.

The study has been published in the online edition of The Journal of the Federation of American Societies for Experimental Biology. The research was funded by a grant from the National Institutes of Health.

Comment on Congressional Budget Office Long-Term Care Proposals

Received several notes from people regarding the information posted from the Congressional Budget Office's report on Long-Term Care proposals.

I thought I would share comments (below) from one leading expert whom I respect as one of the more knowledgable LTCi industry pros. On a personal note, I completely concur that the proposals will cost taxpayers and will do nothing to keep Medicaid solvent to meet the future needs of consumers. The American Association for Long-Term Care Insurance is not chartered as a lobbying entity but we'll do our best to keep everyone apprised and if the time comes to raise our voices ... we will. My goal for this blog is to be information (not an ongoing rant) ... but I'm personally glad to see some folks have signed-up. You can post comments to the blog.

Let's keep building ... we have some wonderfully bright and passionate minds (on our side!)

Jesse Slome


One Expert Comments to the CBO Proposals for Long-Term Care

"I won't go into the problems the Medicaid suggestions raise: How does a minimally trained case worker in a county get info about expenditures made 7 years ago from anyone much less from a cognitively impaired 85 year old! But the LTC insurance piece does concern me. I'm surprised you were not more critical of the CBO report proposal.

As I look at it, it would severely impact LTCi sales opportunities and harm the public.
1. Even where a person made $100K over 40 years, a savings account of 1.2% of income would only accumulate about $53K. Scarcely adequate to buy LTCi for a 65 year old 40 yrs from now. If the client had used the 1.2% right along to pay premiums rather than put money into the Treasury account it would work, but not the way this concept is set up.

2. Second, I couldn't find anything in the report about treasury bills. Nothing in the report that says any interest would be paid which makes affordability of decent LTCi at 65 even more unlikely.

3. Why buy LTCi at all until 65 when the windfall occurs. We've fought the "Medicare covers LTC" myth for years. This would be a million times worse especially since the feds will be touting the plan. Windfall is also an appropriate word. The concept implies a single premium. There is no other way to explain the report's provision that allows funds remaining after the "best" policy is purchased to go back to the accountholder (after taxes). If the CBO authors had envisioned annual premiums, this would never come up because remaining funds would be premised on death or LTC eligibility .

4. The report says insurers would have huge opportunities to sell new products. I agree, but not the products we do today nor products that actually help our clients. CBO optimism is premised on the idea that the cost of LTCi is driven primarily by negative selection. Not so. If everyone had to buy coverage, the cost of policies would go down (maybe 15%), but not enough to make even modestly adequate coverage affordable under this plan. So, at age 65, people would find that unless they were willing to kick in a lot, their promised coverage would be next to nothing. As to insurers, our sales outside the 65 mandated group would be even less than they are today.

On the bright side, we'd have the opportunity to sell new products that matched the limited account funds. On the downside, those products are likely to be standardized (whatever that means to the CBO) products (like Medigap) but dominated by NTQ minimal indemnity coverage akin the old hospital indemnity policies."