The U.S. Department of Health and Human Services made official on Friday what many had expected: it is dropping its efforts to implement the CLASS Act.
Included in the Patient Protection and Affordable Care Act, the Community Living Assistance Services and Supports (CLASS) Act was intended to be a government-run program to allow individuals to voluntarily purchase long-term care insurance. It has been under a constant barrage of criticism from the very beginning with both Congressional Republicans and Democrats complaining that the program wasn't paid for and would be too expensive to administer and run.
The official announcement by HHS came roughly three weeks after news reports surfaced in late September that the HHS Administration on Aging was in the process of closing the CLASS office, reports that HHS officials denied.
Opposition to CLASS was perhaps most pointed during the late summer battle in Congress over deficit reduction and raising the country's debt ceiling. "The Department of Health and Human Services owes the American taxpayer some honest accounting of where the administration is in the implementation process of the CLASS Act, and why they continue to ignore all of the red flags raised about the massive new entitlement program that is being created," said Senator John Thune (R-S.D.), a member of the so-called "Gang of Six" deficit reduction panel of three Democratic and three Republican senators, in late July.
Even the AARP, which has long advocated for a solution to what it sees as a woeful lack of preparation both as a country and individually to pay for long-term care costs, admitted that "CLASS is poorly designed."
Congressional Republicans reacted to the shuttering of the program as an indictment of the entire health reform law, with Senator Orrin Hatch (R-Utah) issuing a statement saying the closure was "a canary in a coal mine. Today's abandonment of the program is just the latest evidence demonstrating ObamaCare's devastating effects and ill-conceived policies. What will be next?"
Administration officials on Friday refuted that sentiment, telling multiple news outlets that CLASS was a stand-alone program and one that wouldn't have any effect on other portions of health reform.
HHS sent a report to Congress last week in which it concluded that premiums for the voluntary, self-financed program would likely cost around $300 month, with a promise of paying a $50-per-day benefit should the insured ever need it. With such a high monthly premium, concerns persisted that not enough healthy people would opt in for coverage to allow the program to pay for itself.
Despite scrapping the program, administration officials are adamant that something needs to be done to address the cost of long-term care, which currently accounts for more than $200 billion in annual Medicaid spending.
"The challenge that CLASS was created to address is not going away," wrote HHS Secretary Kathleen Sebelius in a letter to House Speaker John Boehner (R-MI) informing Congress of its decisions to pull the plug on CLASS. "We also know that left unaddressed, long-term care costs to taxpayers will also increase."
Still, by dropping CLASS, the administration has registered a significant setback, especially in light of the estimates that showed the long-term care plan as providing more than $80 billion in savings over 10 years, a significant chunk of the more than $205 billion health reform has been forecast to save.