Industry Ramps Up Opposition To LTC Program In Senate Health Bill

"So, in essence a large majority of consumers can get far more protection for comparable cost and the Congressional Budget Office said the federal plan is likely to be underpriced," he said.

In other words, Slome said, this is "a legislator's dream because you have money coming in from taxpayers for 5 years with zero expenses, and what legislator wouldn't favor a plan that has the potential to bring in billions of dollars of income with zero risk of expenses guaranteed for a 5-year window?"

The problem, he said, "is that after 5 years, the claims are going to begin, and if it attracts people who have a likelihood of health conditions the claims will start immediately and will escalate exponentially.

"So what they are doing is creating an entitlement plan that will never be adequately funded and will burden future generations with an enormous tax liability," Slome said.

Senate Republicans are also voicing skepticism, as is the Congressional Budget Office.

To qualify for benefits, an enrollee would need to have paid premiums for at least five years and been actively working for at least three of those years; the enrollee "also would have to be unable to perform at least two or three activities of daily living."

The provision was added at the direct request of Sen. Edward Kennedy, D-Mass., chairman of the HELP Committee. It also has the backing of President Obama, and Kathleen Sebelius, HHS secretary, who sent a letter to the committee voicing strong support for it.

The HHS would have considerable authority to adjust premiums and benefits to maintain the solvency of the program.

Moreover, under the prodding of Republicans, the CLASS Act was amended during markup to require the HHS secretary to make annual adjustments to the program's premium and benefit amounts to ensure the program's solvency over the long term.

It did so at the request of the CBO, which is questioning the viability of the program. The CBO said in "scoring" the provision that while it would reduce the federal deficit during its first 10 years of operation, it would be potentially adding significantly to the deficit beyond that.

But, the CBO estimated that by raising the premium to $85 per month and capping benefits at the $50 daily maximum, the program could remain solvent through 2050.

However, in a letter to members of the committee, Frank Keating, president of the ACLI, said the trade group is concerned "about the confusion that would be created by offering a government-sponsored long-term care program."

The letter further argues that the provision would only cover about 12% of the total cost of their potential around-the-clock home health needs.

Indeed, the provision only further misleads the more than 60% of Americans "who mistakenly believe that Medicare will help them pay for their long-term care needs," Keating said

He also questions the basic concept of the plan. Keating explains that with the cost of a nursing home currently averaging $75,000 annually and home health services running as high as $46 per hour, "the daily benefit of $50 under the CLASS program would not be nearly enough to cover the cost of a full day of these services."

In addition, he said, "the false sense of security created by $50 per day of inadequate coverage will cause people who can and should plan ahead for their long-term care needs not to take appropriate action."