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Obama drops long-term health care program

From Scott Spoerry, CNN Senior Producer
updated 11:55 AM EDT, Mon October 17, 2011
STORY HIGHLIGHTS
  • Obama administration drops long-term insurance program
  • Officials had questions about whether it could sustain itself
  • McConnell calls provision a "budget gimmick"

WASHINGTON (CNN) -- Citing cost concerns, the Obama administration said Friday it has halted a long-term care insurance program that was part of the massive health care law passed in 2010.

Called the CLASS Act (Community Living Assistance Services and Supports), the program was canceled by Health and Human Services Secretary Kathleen Sebelius after a 19-month effort to find a way to make it financially viable.

In a letter to Congress, Sebelius wrote, "Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time."

The CLASS program was similar to long-term care plans available in the private sector in which workers sign up and pay a monthly premium. It was voluntary and was to be paid for entirely by the premiums from those who signed up. In return, subscribers would get a daily benefit.

But a senior administration official told CNN that there were big questions whether CLASS could be self-sustaining even when the health care reform law was being considered by Congress. And as a result, lawmakers specified that the HHS secretary had to determine that the program would be sustainable for 75 years before certifying it.

The legislation had been championed by the late Sen. Edward Kennedy, D-Massachusetts.

In a blog entry on Healthcare.gov, Sebelius cited warnings that not enough young healthy people would sign up.

"This could have led to a vicious cycle where premiums would have to be set higher and higher to cover the likely costs of benefits, leading fewer and fewer healthier people to sign up for the program," she wrote.

Sebelius said she wasn't giving up.

"So even as we suspend work on implementing CLASS, we are recommitting ourselves to the ultimate goal of making sure Americans can get the long-term care they need, whether it's a working-age mom with disabilities who needs daily support right now or a young man at his first job who wants to protect himself and his family against the possibility of huge long-term care costs in the future," Sebelius wrote.

Congressional Republicans had long targeted the program as part of their effort to repeal President Barack Obama's health care reform law.

Responding to the Sebelius decision, Senate Republican leader Mitch McConnell said in a statement, "The Obama administration today acknowledged what they refused to admit when they passed their partisan health bill: the CLASS Act was a budget gimmick that might enhance the numbers on a Washington bureaucrat's spreadsheet but was destined to fail in the real world."

McConnell said the CLASS Act "is only one of the unwise, unsustainable components of an unwise, unsustainable law."

"We should repeal the CLASS Act and the rest of the health spending law and replace it with the type of common-sense reforms that lower costs and Americans support," McConnell said.

CNN's Jessica Yellin contributed to this report.

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