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House GOP questions CLASS Act startup funds

By Jason Millman 03/17/11 02:32 PM ET

House Republicans on Thursday questioned why the White House is requesting millions of dollars to implement a long-term health insurance program that the administration admits is unsustainable.

The Department of Health and Human Services (HHS) is seeking $120 million in the 2012 budget to ramp up implementation of the Community Living Assistance Services and Support (CLASS) Act, a voluntary program included in the healthcare reform law enacted nearly a year ago.

But Republicans on the House Energy and Commerce Committee’s Health subpanel want to know why HHS is moving forward on a program that HHS Secretary Kathleen Sebelius acknowledges is deeply flawed. They are particularly agitated that more than three-quarters of the funding would go toward an education and outreach campaign for a program the department is in the midst of transforming.

“If we have a program that everyone acknowledges is broken, why do we want to waste money educating people on something that might not work in its present form?” asked Rep. Bob Latta (R-Ohio) during a hearing on the program.

Concerns about the sustainability of the CLASS Act surfaced during the healthcare reform debate, but the program has been under heightened scrutiny since President Obama’s fiscal commission recommended repealing or reforming it.

Sebelius said last month the department, which has generous flexibility under the law to make tweaks to the program, will consider premium bumps over time and tightening eligibility standards to ensure the program’s sustainability.

“It would be irresponsible to ignore the concerns about the CLASS program’s long-term sustainability in its current form, and we haven’t done that,” Sebeliustold senior advocates last month.

On Thursday, Administration on Aging Secretary Kathy Greenlee testified the program wouldn’t get off the ground until HHS can ensure it is fiscally sound.

“The program will not start unless we can absolutely certain it can be solvent and self-sustaining in the future,” Greenlee said.

The CLASS Act is an employer-based program meant to take the place of private long-term care insurance, which few people currently have. Employers must choose to enroll in the program, and employees can opt out if they wish.

Conservatives raised concerns that the program faces severe funding challenges if healthier individuals decide to opt out, leaving only sick individuals who are the most expensive to cover.

“We are absolutely committed to the solvency of the program, and the key to solvency is broad participation,” Greenlee said.

The program is expected to start collecting premiums by late 2012 or 2013. Employees generally must pay in five years of premiums before they can collect payments if they become disabled.

Greenlee said department actuaries are in the process of reviewing models that will support the program, and it will publish a regulation in the fall with the department’s assessment of three plan offerings. Greenlee said she was unsure whether the rule would include specific pricing.

After the hearing, Greenlee told The Hill that the pricing structure would place an emphasis on age.

“There’s no underwriting of the program, so age clearly is something that we will use and need to use as we look to market to younger individuals,” she said.

Rep. Michael Burgess (R-Texas), who chairs the GOP Congressional Health Care Caucus, said he was concerned the public will mistakenly believe the program is a new automatic entitlement.

“I fear this CLASS Act gives people the false impression the government will pick up the expense,” Burgess said.

Democrats, who said they are committed to making the program solvent, accused Republicans of holding the hearing as part of their strategy to peel back parts of the healthcare reform law.

“I’m getting very fr
ustrated because almost every hearing is an effort … to defund or debunk something that’s in the Affordable Care Act,” said Rep. Frank Pallone (D-N.J.).