Will Congress Pass on Class?

What is CLASS?  The Community Living Assistance Services and Support Act establishes a new voluntary long-term care program for employees around the country.  It is not insurance, as it lacks many of the risk-management principles that term would entail.  It also lacks long-term financial viability, and this is why this portion of the PPACA must be repealed.

Clearly, this country is at the brink of financial apocalypse.  It has been coming for three decades – a convergence of demographics and economics that Congress has failed to prepare for – and its consequences are already starting to be seen.  Call Florida one battleground; there PPACA has been declared unconstitutional in a courtroom and a new Medicaid program is being developed that may no longer rely on or be part of the federal system.  Call Wisconsin a battleground; protestors there clog the streets of Madison about a bill poised to pass that requires state employees to contribute more money to their health and pension programs (but still less than most employees in Milwaukee-area businesses) and to give up collective bargaining (except for wages) that can only be changed at the ballot box.  Those that witnessed the riots in Greece and France over similar issues and thought it could never happen here did not have to wait long to see that, yes, in fact, it could.

All Florida and Wisconsin (and many other states) are trying to do is to balance their budgets.  This is just the proverbial tip of the iceberg:  Budgets will get harder to wrap fiscal arms around in the future, and problem-solving now requires sacrifices that will seem easy compared to what lies ahead if some of these early steps are prevented.

What does this have to do with CLASS?  Everything!  CLASS is a prototypical example of trying to solve a problem without any thought to the long-term financial consequences and what it could ultimately cost 10 or 15 years down the road.  The economic crises of today were sown years ago with programs just like this – short-term gain and long-term disaster.

CLASS is to be funded with employee contributions only – no taxpayer dollars – into something called an Independence Fund.  There is a five year vesting period of paying in (and working for at least three of those five years) before any benefits can be paid out.  The benefits have not been determined yet, nor have the premiums – with one significant exception:  Students and those who earn less than the Federal Poverty Level will pay only five dollars per month for long-term care cash benefits that are guaranteed issue and payable for life as long as one meets the disability definition.

Who will is appeal to? It will appeal to people with medical issues who probably would not qualify for long-term care insurance.

What kind of a pool does this leave?  How can this be reasonably expected to stay financially afloat 10, 15, or 20 years down the road?  And when it collapses, what happens?  Will taxpayers be forced to bail out?  Or will those participating in it for years just get their money back with a good-luck note for their future long-term care needs?  Will these Independence Fund contributors picket the White House, remembering that benchmark year of 2011 when those in Wisconsin exercised the same right?