Long-Term Services and Supports: Meeting the Needs of Elders, Families and the Workforce Through Social Insurance

Summary: The Community Living Assistance Supports and Services (CLASS) program, recently enacted as part of the national health reform law, is a major change in U.S. long-term care financing. This new social insurance program relies on behavioral economics principles to maximize voluntary enrollment, rather than mandating participation. By paying benefits in cash, it provides flexibility to disabled people and their caregivers. If it presents a compelling value relative to private insurance, it could enable many Americans to insure themselves against the risk of needing long-term care at home during their working lives as well as in their retirement years. However, experts say that the CLASS program’s lack of underwriting places it at considerable risk of adverse selection, which will drive premiums up and reduce participation. The program will require a sustained marketing campaign to attract participation. Policy makers will need to make improvements that properly balance the long-term care needs of Americans with affordability and program solvency.