The ObamaCare games being played on us
If ever you needed proof that our government should not be entrusted with control of our healthcare, a clear case sits before you now. Even so, the Obama Administration remains confident you will not take the time to understand what has happened. Most citizens won’t.
On a recent Friday late afternoon the Administration announced the CLASS Act portion of ObamaCare will not be implemented. Friday afternoon announcements are timed with the hope they will be little noticed, a strategy of both Democrat and Republican administrations. But if you open your eyes to comprehend what happened here, you may realize what they hope you overlook, that you and I are being played by our government.
The CLASS Act (Community Living Assistance Services and Support) is an ObamaCare program ostensibly to provide benefits for long-term care (LTC). Anyone who has been a caregiver for grandma as she becomes too old and frail to care for herself knows meeting that family duty of loving care can turn life on its head.
Caring for an elderly family member soon becomes a strain as it consumes more of your time, competes with spouses and children for your attention, interferes with work schedules, twists sibling relationships over the sharing of time and expenses and builds stress like a pressure cooker; never mind that it also changes the relationship with the elder needing care.
Finally, making the decision on a nursing home placement will break your heart even though you put it off as long as possible.
One of my professional designations is CLTC (Certified in Long Term Care) and I know a little about this subject, but it doesn’t take expertise to examine the ObamaCare CLASS Act.
The cost of LTC is rising. Nursing home care here in Georgia costs nearly $60,000 a year on average in 2011, $70,000 nationwide. That means a LTC insurance policy would need a daily benefit of $175 to $200 to provide full coverage. LTC cost should be of concern to you for several reasons.
America has led the world in healthcare innovation and technology. As a result we are all living longer, and an increasing number of us survive maladies that in past decades would have ended our life. That means more of us will reach an age and frailty that requires long-term care.
For most families that translates into a three-way squeeze: we have to figure out how to finance our children’s college education, how to fund our own retirement and how to care for our parents when they are no longer able to take care of themselves.
Medicaid is a major provider of LTC funding for the indigent. As a result, some financial advisors developed a service called “Medicaid Planning,” helping solvent seniors become poor enough on paper to qualify for Medicaid LTC by gifting their assets to children and purchasing annuities. But Medicaid is going broke, too, and states have been steadily closing these loopholes to force people with means to pay for their own LTC.
Now comes a little-known provision of ObamaCare known as the CLASS Act, designed to provide a LTC benefit. A government program to help with grandma’s LTC would be a good thing, wouldn’t it? Well, maybe. You need first to understand how this benefit is structured, and then pose the question why the public knows so little about CLASS. Why hasn’t CLASS been touted as a solution to America’s real healthcare crisis?
Explaining the CLASS Act makes me feel a little like a magician preparing for illusions by showing my sleeves and declaring, “At no time will my fingers leave my hands!” Here we go.
The CLASS Act requires employers to offer an optional program to employees for LTC coverage, in which all employees are automatically enrolled and can choose to opt out, the daily benefit is estimated at about $50 per day, the premiums are as yet undefined, and the employee must wait five years before any benefit payments are possible. There, I did a summary in one sentence.
What’s wrong with that? you might ask.
Well, for starters, automatic enrollment is the first trick that should make you wary that an agenda is hidden somewhere if this is supposed to be an optional program. The trick of course is that requiring an overt act of completing paperwork to opt out means fewer people will do so, more will remain enrolled. That doesn’t sound too bad so far, does it?
You might notice that a $50 per day benefit doesn’t do much for a service that costs between $175 and $200 per day, but you won’t see that information highlighted in CLASS Act promotions. The CLASS benefit might pay for a little home care, maybe some limited adult day care, but it would only slightly lighten the load on the cost of assisted living or a nursing home.
So you might wonder why this benefit was woven into ObamaCare at all if it provides mostly the illusion of benefit. There is an explanation, but first consider the opt-out provision.
If you are automatically enrolled in the CLASS system and see premiums deducted from your paycheck, why would you opt out? You might opt out if you are young and healthy and don’t want to pay for it, of course. Why would you want to continue paying those premiums? Because there is a threat to your health and you want to keep the coverage in place, even though it will only pay for a fraction of nursing home care, that’s why.
And that is the very reason that so many analysts who understand this game cried foul at the very beginning, knowing the population of CLASS Act beneficiaries would tend to carry an impaired risk, which translates into higher claims payouts and escalating premiums; leaving premiums unaffected would make the program more costly than could be sustained. CLASS and the word “unsustainable” were often seen in the same sentence, but of course such wonky details never made the evening news. We in the financial services industry knew the program would go broke in short order.
If that is true, why enact the program in the first place? Stay with me, don’t give up yet.
Remember that provision requiring the payment of premiums for five years before any benefits could be paid? And do you remember when the Administration was pushing hard to sell America on enacting ObamaCare while claiming the law would save money? Well, (drumroll, please) $86 billion of their claimed savings came from assumed premiums collected by the CLASS Act during that first five years. After five years, when CLASS started to pay benefits, the program would start its inexorable march toward insolvency.
As the Department of Health and Human Services prepared for implementation, they recently determined it would take 230 million enrollees to sustain the CLASS Act; that is more than the entire American work force even when everybody is working. So, HHS finally did something wise – they dumped this albatross before implementation.
Even though a small contingent of true believers are howling, the most believable explanation for this mess is the CLASS Act was never intended to be a real program, that it has already served its purpose, bolstering by $86 billion the fictional claims of ObamaCare savings, a claim sorely needed when stumping for ObamaCare votes. Since the voting is now long past, perhaps the program fulfilled its mission even though never implemented, and scrapping CLASS is no great loss. But others are even more cynical than I am.
They believe the goal of the CLASS Act was to get the LTC camel’s nose under the flap of the tent, and when the program inevitably became insolvent, then the American taxpayer would be expected to bail it out, thereby solidifying a new and monstrous entitlement.
Whether you agree with the cynics or not on a massive fraud, the CLASS Act was certainly a little-understood program, and it did back up the Administration’s argument that ObamaCare would save money, even if that $86 billion was nothing more than a cleverly designed trick.
Misleading the public is an overly kind summary of the CLASS Act, which serves as a perfect example why government cannot be trusted to control our healthcare.
[Terry Garlock of Peachtree City occasionally contributes a column to The Citizen. His email is email@example.com.]