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While everyone agrees that allowing elderly and disabled Americans to stay in their homes is better from a fiscal standpoint, certain details of the CLASS Act have made it an easy target for critics. Examining the merits of these criticisms provides a window to understanding both the complexity of health care reform and why it's so ripe for mischaracterization. For instance, to prevent people from purchasing long-term-care coverage when they are already in need, the CLASS Act requires that enrollees be employed and pay into the system for five years before becoming eligible to collect benefits...
...opponents are just as guilty of fiscal shenanigans. It's true, as Thune pointed out, that the CBO says the CLASS Act will increase budget deficits in the long term, but that's only because of the peculiar way the deficit is calculated. Premiums collected would be invested in federal securities, and when the interest earned is transferred back to the CLASS Act trust fund, the transaction would be recorded as an increase in the deficit. The Senate bill also requires that the CLASS Act trust fund be solvent over a 75-year period, and the bill would give...
Still, Republicans are not the only ones protesting the CLASS Act on the grounds that it won't work financially. In October, seven Democrats wrote to Senate majority leader Harry Reid urging him to exclude the CLASS Act - already included in the passed House health reform bill - from the Senate's legislation, saying they had "grave concerns that [the CLASS Act would] create a new federal entitlement program with large, long-term spending increases that far exceed revenues." The chief actuary for the federal Centers for Medicare and Medicaid Services wrote that the CLASS Act provisions in the House bill...
These are damning statements, but here again, the devil is in the details. The CLASS Act in Reid's Senate bill is considerably stronger in fiscal terms, according to the American Academy of Actuaries (AAA), than the much criticized act as outlined in the House and HELP committee bills. "There have been quite a few changes in the right direction," says Steven Schoonveld, an actuary who wrote the original critical AAA report on the CLASS Act in the HELP bill...
...major change is in eligibility. The original CLASS Act would have allowed nonworking Americans to enroll in the long-term-care plan if their spouse worked, which could have led to "adverse selection," attracting people to the program who were too disabled to hold a job and therefore sure to file claims. Of course, excluding these people also means that spouses who stay at home just to care for their children (or for other reasons) are excluded from eligibility. The House bill also did not include the 75-year solvency requirement. (See "The Year in Health...