Even with CLASS Act, there would be troubles with long-term care

(John Amis) A handful of post mortems on the CLASS Act has underscored the mess we face with respect to long-term care now that the health reform program has been tabled.

“The dilemma of paying for long-term care is likely to worsen now that the Obama administration pulled the plug on a program seen as a first step,” Ricardo Alonso-Zaldivar said in a commentary for the Associated Press. A New York Times article on Tuesday referred to the decision to dismiss CLASS Act a “blow to middle class hopes,” and according to an article in Politico, “the near-term outlook for improving access to long-term care is bleak.”

The CLASS Act certainly offered more long-term care benefits than there are now. But what’s gotten less attention is how limited, in the context of exploding health care costs, those benefits would have been.

As written in the health reform law, the CLASS Act would have provided a minimum $50-a-day benefit, or about $18,000 a year. That’s not nothing. But, in the world of long-term care, it can still leave the patient footing a pretty big bill.

A year-long stay in the average nursing home costs about $77,000, or $210 a day, according to Genworth Financial’s annual survey of long-term care costs. Even if an individual received CLASS Act benefits, he or she would still be left with a $58,250 annual bill.

The gap between care costs and CLASS benefits gets smaller for less intensive care. A year in an assisted living facility costs $39,000, while the average salary for an in-home health aide is $19 an hour.

“Fifty dollars per day is better than not having any funding for care,” says Beth Ledden, vice president of long term care products at Genworth Financial. “But there’s still a gap. It gets particularly huge with nursing homes, which are charging $200 per day for a private room.”

The gap between CLASS Act benefits and care costs would likely grow. The health reform law considers the rising costs of health care and gives an increase in benefits pegged to increases in the Consumer Price Index. Health care costs have, however, historically grown much faster than the CPI.

Whether CLASS would have worked depends a lot on what level of care an individual required. John McDonough,a former aide to Sen. Ted Kennedy, captured this nicely in his recent book, “Inside National Helath Reform.”

“For a disabled person needing nursing-home-level care, the $50 to $75 daily CLASS benefit is not a solution,” he wrote. “For a disabled person attempting to live independently in a non-institutionalized situation, the daily payment can make an enormous difference.”

With or without the CLASS Act, there’s widespread recognition that we face a long-term care problem. There are a decent number of ideas on how to solve it. But there are also huge political obstacles any of those solutions would have to overcome.