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Letter to the Honorable Kay R. Hagan 1 (July 2009)

handle is hein.congrec/cbo9348 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 July 6, 2009 Honorable Kay R. Hagan United States Senate Washington, DC 20510 Dear Senator: This letter responds to your request for additional information regarding the Congressional Budget Office's (CBO's) analysis of section 191 of the Affordable Health Choices Act. That legislation is currently under consideration by the Senate Committee on Health, Education, Labor, and Pensions. Section 191, which is also known as the Community Living Assistance Services and Supports Act (the CLASS Act), would establish a federal insurance program for long-term care. Under that program, eligible enrollees who need assistance performing common daily activities such as dressing, bathing, and eating would receive cash benefits to pay for support services in a community setting. Severely impaired enrollees could apply their benefit toward the cost of residential care in a nursing facility. Enrollment in the program would be open to noninstitutionalized individuals who are either active workers or the nonworking spouse of an active worker. Premiums would vary according to the person's age at enrollment. The average premium would be limited to $65 per month in 2011 and indexed for inflation in subsequent years. The benefit would be at least $50 per day (indexed for inflation); the Secretary of Health and Human Services (HHS) would set actual benefit levels according to the extent of an enrollee's impairment. Benefits would be paid out of a trust fund consisting of enrollees' premiums and interest earned on its balances. 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 legislation would provide considerable authority to the HHS Secretary to adjust premiums and benefits to maintain the solvency of the program. The Secretary would be allowed to reduce all benefits to the daily minimum of $50 and, if that action was inadequate to avoid insolvency, to increase enrollees' premiums. CBO estimates that the proposal's net effect on the federal budget would be to reduce the budget deficit by about $58 billion during the 2010-2019 period (see Table 1). In CBO's analysis, the real (inflation-adjusted) average monthly premium was assumed to be $65, and the real daily benefit was assumed to average about $75 per day; beneficiaries whose impairments were relatively modest would receive less than that per day, and those whose impairments were more www.cbo.gov

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