Financed entirely through enrollee premiums, the CLASS Act program collects premiums from participants for five years before paying out any benefits, a practice the Congressional Budget Office estimates reduced the 10-year cost of the legislation by $70 billion. But opponents say the program's fiscal problems will surface in the long term, and use other CBO estimates to make this case.
“With CBO estimating that the CLASS program will begin running a deficit by 2030; and CMS' own actuaries estimating that the program will go into deficit in 2005, a taxpayer bailout may look very attractive to future Congresses, when premium increases and benefits cuts can no longer make up the shortfall,” Pitts said in his opening remarks.
Kathy Greenlee, assistant secretary for aging at HHS, told the panel that 10 million Americans need long-term services, and that number is expected to reach 15 million by 2020.
Meanwhile, more than 1 out of 5 people who enter a nursing home will exhaust their own resources to qualify for Medicaid after nearly depleting their savings. The CLASS program, Greenlee said, will allow Americans to remain independent for as long as possible.
Rep. Bob Latta (R-Ohio) asked Greenlee why the president requested $120 million for the program in his fiscal 2012 budget—of which $93.5 million is to be used for marketing purposes—for something HHS has acknowledged is currently flawed.
“If we have a program that is broken, why would we spend money to educate them on it?” Latta asked Greenlee, who replied that her office is working to improve the program.
Those efforts, she said, include partnering with employers to disseminate outreach information and enroll employees; changing the program's employment and earnings requirements; closing loopholes that could allow people to skip premium payments and then re-enroll in the program without any penalty; and exploring options for indexing premiums for inflation so they rise with benefits.