AP sources: Senate health care bill likely to include new insurance program for long-term care

WASHINGTON — Senate health care legislation expected this week is likely to include a new long-term care insurance program to help the elderly and the disabled avoid going into nursing homes, Democratic officials say.

Senate Majority Leader Harry Reid, D-Nev., is expected to incorporate the voluntary program in legislation to be unveiled as early as Wednesday, said the officials, who spoke on condition of anonymity because a final decision has not been made.

Known as the Community Living Assistance Services and Supports Act, or CLASS Act, the program was a top priority for the late Sen. Edward M. Kennedy, D-Mass. It would begin to close a gap in the social safety net that's received little attention in the health care debate.

Fiscal conservatives and government economists have questioned whether the program would be financially sustainable over the long run, and insurance companies are lobbying to strip it from the health care bill.

Nonetheless, the House included the program in its health care legislation, with the approval of the Obama administration. In the Senate, the Health Committee bill had included it, but the Finance Committee omitted it. The approach Reid is considering in a combined bill would address the objections of fiscal conservatives by stipulating that premiums from the program could not be counted in offsetting the cost of the broader health care bill. Reid's office had no comment on Tuesday.

The cost of nursing homes averages $70,000 a year, and a home care attendant runs about $29 an hour. Medicare only covers temporary nursing home stays. Middle-class households have to exhaust their savings before an elder can qualify for nursing home coverage through Medicaid.

Under the proposed program, people would pay a modest monthly premium during their working years. If they become disabled, they would get a cash benefit of at least $50 a day that could be used to pay a home care attendant, buy supplies and equipment, make home improvements such as adding bathroom railings, or defray the costs of nursing home care.

The Congressional Budget Office estimated that the program would be fiscally solvent over a 75-year-period with the income from premiums, and no taxpayer financing. That assumes an initial monthly premium averaging $123, and a $75 daily benefit. People would sign up for the program at work through a payroll deduction. They would have to pay premiums for five years before they could qualify for benefits. Both the premiums and benefits would be adjusted annually.

"This is primarily a product for baby boomers, and people who are still working," said James Firman, president of the National Council on Aging, and a supporter of the program. "If we don't do this now, I don't think boomers are going to get another chance."

Supporters say the government benefit would provide a foundation upon which private insurance companies could build by selling supplemental long-term care coverage. But the industry says a new program would only create confusion for consumers.

Critics' concerns got validation recently from a report by Medicare economists who are expert in long-range cost estimates. In a report issued last weekend, they said a voluntary insurance program is likely to attract people who expect they'll need the coverage. Without taxpayer subsidies, premiums would keep going up, discouraging healthy people from signing up and triggering an "insurance death spiral."

"Individuals with health problems or who anticipate a greater risk of functional limitation would be more likely to participate than those in better-than-average health," the report said. "There is a significant risk that the problem ... would make the CLASS program unsustainable."