- Jun 6, 2007
- 853
- 484
- 910
Part Two
There are some other points that need to be highlighted in a public discussion of this bill. Proponents of this initiative like to paint this initiative as the "cure" for the American people on the problem of how to help Americans that need assistance to live in their community when their health fails them, they like to imply that almost everyone will have this insurance coverage. The truth of the matter is that this type of insurance coverage will likely not be widespread, the CBO analysis uses the figure of five percent (that is, five percent of the American people will join the program) and the Medicare experts make a projection that only two percent will have this coverage. The importance of this point is that if Congress holds off on this initiative because it is financially imprudent to pursue it right now, the percentage of Americans who won't have long-term care insurance will be relatively small especially considering the number of Americans who will pick-up private long-term care insurance if the CLASS program is not available.
Its a cockamamie scheme the Congress has come up with for this CLASS initiative in the bill. This initiative is very generous in its benefit offering giving lifetime benefits and the way the Congressional designers orchestrate the system to pay for this big expense of lifetime benefits is they create a stiff penalty for people that join the program and then drop out and dont re-enroll within five years, five year drop out re-enrollees have to pay the usual premium plus an additional penalty amount. Common sense would indicate that this penalty feature will cause people not to join until later in life which is exactly what Congress should not want because the bigger the enrollee pool the lower the premiums; Jane and Joe American will probably think to themselves this long-term insurance program is a valuable program one day probably when I am pretty old I am going to be in a situation where I could really use the benefits of this program but I dont want to join early in life because if I run into to money problems and have to drop out of the program for five or more years when I re-enroll I am going to incur a stiff penalty and considering that one only needs to be enrolled in the program for five years to get the lifetime benefit I will wait to later in life to join.
Another problem in the Senate bill the way it is written is it allows Americans to game the system from this standpoint. The bills provisions would allow for people that are eligible to enroll through the alternative enrollment process, that is, their self-employed or their employer does not have automatic enrollment, to enroll in the program reach their vested benefits stage, the five year period, then disenroll and just make sure they reenroll within five years whereby they would reinstate their vested benefit status (Title XXIII Sec 3203(b)(1)(C)(ii)(II)) then disenroll the next disenrollment period and reenroll within five years to preserve their vested benefit status and repeat the process as needed for certain Americans that want to save on premium expenses they could play the system like this and of course if they did this would hurt the balance sheet of this long-term insurance program.
The smart and wise play for the U.S. Senate is to drop this CLASS insurance program because it will be a financial ticking time bomb for the American People. But if the Senate believes it can drop the issue from the bill, this would be a good long-term care program for America that the Senate could add to the bill. First, the long-term insurance program will not be a government run insurance program from the standpoint that it could put the American taxpayers on the hook to pay for the program. What the program should look like is that the Office of Personnel Management should put out for bid to private insurance companies a bid to offer a long-term care insurance program through the Office of Personnel Management for all Americans that would meet certain criteria. The value of the CLASS insurance program is that it offered very modest financial help, $50.00 per day, to people that needed help to live in the community. One criteria for the new program is that it would at least offer that $50.00 per day benefit, another criteria would be that it would allow for vestment of that benefit after a five year premium payment period another criteria would be it that the initial premium for enrollees would be permanent absent an increase for the inflation as well as the $50.00 benefit would be placed on an inflation index. The different (Non-CLASS) criteria would be that the insurance program would be allowed one underwriting consideration which would be for age there could be allowed a one to one and a half or one to two ratio for age; it is nuts to treat a person of age thirty the same as way a person of age fifty-five is treated from a premium standpoint when the latter person is so much closer to being eligible for benefits than the former person. Also, this insurance program would not be subject to all the social service criteria of the Class program no $5.00 per month premium limit for people with incomes below the Federal Poverty Level or students. The other big difference between this program and the CLASS program would be that their would not be any lifetime guarantee of benefits, a vested benefits enrollee when that enrollee qualifies for benefits would get five years of benefits plus for each additional year of premium payments beyond five years certain additional portion of a year worth of benefits. Two of the extremely valuable positive features of this criteria is that it would incentivize people to join the program early so they could build up many years of benefits so they wouldnt run out of benefits when they physically need assistance to live in their community and it would incentivize people to wait until they really truly need this long-term insurance benefit to pursue qualifying for the benefit (With the current CLASS program, the system will see enrollees and their helpers stretching in an extraordinary fashion to qualify for that lifetime benefit- America thinks its seen fraud it hasnt seen nothing yet!)! The insurance program should keep all the CLASS provisions funneling benefits to the Medicaid program for beneficiaries that use the Medicaid program. The criteria would also mandate the insurance provider could only use five or six percent of the premiums collected for administrative expenses and profit considering the Senate CLASS program mandates only three percent (House bill four percent) can be used for administrative expenses the insurance provide will still do financially well.
This type of program would be a nice moneymaker for the insurance company that wins the bid considering the enrollment pool the company will have. A bid contract would be for seven years where the current long-term care insurance provider would be the presumptive winner in future bids so as to provide continuity in the program and thus make it easier for Americans participating in the program. Congress could also make an automatic enrollment (and payroll deduction) with an employee opt-out option for employees age forty-five and older where the automatic enrollment is mandatory on large employers. The reason for this focus on forty-five year old Americans is that this program would be of great assistance to these Americans when they become seniors where they need assistance living in their community and the government would be providing great help to these Americans trying to facilitate them entering this program. Lastly, the Congress could maybe also provide that $500 or $750 of the premium costs for Americans age forty-five or older could be pre-tax income to further incentivize Americans to join. The loss of direct tax revenue here would probably be made up by savings to Medicaid from this program and considering that beneficiaries (and this tax advantage would likely increase the number) of this program will to a very high degree be spending their entire monies they get as benefits for living assistance care they will be creating wage and business tax revenue for the federal government as well as wage and tax revenue for the government will be generated from the insurance provider of this program.
There are some other points that need to be highlighted in a public discussion of this bill. Proponents of this initiative like to paint this initiative as the "cure" for the American people on the problem of how to help Americans that need assistance to live in their community when their health fails them, they like to imply that almost everyone will have this insurance coverage. The truth of the matter is that this type of insurance coverage will likely not be widespread, the CBO analysis uses the figure of five percent (that is, five percent of the American people will join the program) and the Medicare experts make a projection that only two percent will have this coverage. The importance of this point is that if Congress holds off on this initiative because it is financially imprudent to pursue it right now, the percentage of Americans who won't have long-term care insurance will be relatively small especially considering the number of Americans who will pick-up private long-term care insurance if the CLASS program is not available.
Its a cockamamie scheme the Congress has come up with for this CLASS initiative in the bill. This initiative is very generous in its benefit offering giving lifetime benefits and the way the Congressional designers orchestrate the system to pay for this big expense of lifetime benefits is they create a stiff penalty for people that join the program and then drop out and dont re-enroll within five years, five year drop out re-enrollees have to pay the usual premium plus an additional penalty amount. Common sense would indicate that this penalty feature will cause people not to join until later in life which is exactly what Congress should not want because the bigger the enrollee pool the lower the premiums; Jane and Joe American will probably think to themselves this long-term insurance program is a valuable program one day probably when I am pretty old I am going to be in a situation where I could really use the benefits of this program but I dont want to join early in life because if I run into to money problems and have to drop out of the program for five or more years when I re-enroll I am going to incur a stiff penalty and considering that one only needs to be enrolled in the program for five years to get the lifetime benefit I will wait to later in life to join.
Another problem in the Senate bill the way it is written is it allows Americans to game the system from this standpoint. The bills provisions would allow for people that are eligible to enroll through the alternative enrollment process, that is, their self-employed or their employer does not have automatic enrollment, to enroll in the program reach their vested benefits stage, the five year period, then disenroll and just make sure they reenroll within five years whereby they would reinstate their vested benefit status (Title XXIII Sec 3203(b)(1)(C)(ii)(II)) then disenroll the next disenrollment period and reenroll within five years to preserve their vested benefit status and repeat the process as needed for certain Americans that want to save on premium expenses they could play the system like this and of course if they did this would hurt the balance sheet of this long-term insurance program.
The smart and wise play for the U.S. Senate is to drop this CLASS insurance program because it will be a financial ticking time bomb for the American People. But if the Senate believes it can drop the issue from the bill, this would be a good long-term care program for America that the Senate could add to the bill. First, the long-term insurance program will not be a government run insurance program from the standpoint that it could put the American taxpayers on the hook to pay for the program. What the program should look like is that the Office of Personnel Management should put out for bid to private insurance companies a bid to offer a long-term care insurance program through the Office of Personnel Management for all Americans that would meet certain criteria. The value of the CLASS insurance program is that it offered very modest financial help, $50.00 per day, to people that needed help to live in the community. One criteria for the new program is that it would at least offer that $50.00 per day benefit, another criteria would be that it would allow for vestment of that benefit after a five year premium payment period another criteria would be it that the initial premium for enrollees would be permanent absent an increase for the inflation as well as the $50.00 benefit would be placed on an inflation index. The different (Non-CLASS) criteria would be that the insurance program would be allowed one underwriting consideration which would be for age there could be allowed a one to one and a half or one to two ratio for age; it is nuts to treat a person of age thirty the same as way a person of age fifty-five is treated from a premium standpoint when the latter person is so much closer to being eligible for benefits than the former person. Also, this insurance program would not be subject to all the social service criteria of the Class program no $5.00 per month premium limit for people with incomes below the Federal Poverty Level or students. The other big difference between this program and the CLASS program would be that their would not be any lifetime guarantee of benefits, a vested benefits enrollee when that enrollee qualifies for benefits would get five years of benefits plus for each additional year of premium payments beyond five years certain additional portion of a year worth of benefits. Two of the extremely valuable positive features of this criteria is that it would incentivize people to join the program early so they could build up many years of benefits so they wouldnt run out of benefits when they physically need assistance to live in their community and it would incentivize people to wait until they really truly need this long-term insurance benefit to pursue qualifying for the benefit (With the current CLASS program, the system will see enrollees and their helpers stretching in an extraordinary fashion to qualify for that lifetime benefit- America thinks its seen fraud it hasnt seen nothing yet!)! The insurance program should keep all the CLASS provisions funneling benefits to the Medicaid program for beneficiaries that use the Medicaid program. The criteria would also mandate the insurance provider could only use five or six percent of the premiums collected for administrative expenses and profit considering the Senate CLASS program mandates only three percent (House bill four percent) can be used for administrative expenses the insurance provide will still do financially well.
This type of program would be a nice moneymaker for the insurance company that wins the bid considering the enrollment pool the company will have. A bid contract would be for seven years where the current long-term care insurance provider would be the presumptive winner in future bids so as to provide continuity in the program and thus make it easier for Americans participating in the program. Congress could also make an automatic enrollment (and payroll deduction) with an employee opt-out option for employees age forty-five and older where the automatic enrollment is mandatory on large employers. The reason for this focus on forty-five year old Americans is that this program would be of great assistance to these Americans when they become seniors where they need assistance living in their community and the government would be providing great help to these Americans trying to facilitate them entering this program. Lastly, the Congress could maybe also provide that $500 or $750 of the premium costs for Americans age forty-five or older could be pre-tax income to further incentivize Americans to join. The loss of direct tax revenue here would probably be made up by savings to Medicaid from this program and considering that beneficiaries (and this tax advantage would likely increase the number) of this program will to a very high degree be spending their entire monies they get as benefits for living assistance care they will be creating wage and business tax revenue for the federal government as well as wage and tax revenue for the government will be generated from the insurance provider of this program.
