October 19, 2011--On Friday, HHS Secretary Kathleen Sebelius announced that the Obama administration will end the Community Living Assistance Services and Supports Act, a long-term care program created by the federal health reform law, the New York Times reports (Pear, New York Times, 10/14).

The CLASS Act was intended to provide insurance to workers if they become unable to care for themselves because of injury or illness. Since its inception, critics have questioned the CLASS Act's fiscal sustainability and called it an "accounting gimmick."

Last month, questions were raised about the future of the program after an email from Bob Yee, the chief actuary of the office in charge of the program, indicated that the office was closing and that he was leaving his position.

HHS denied reports that the office was shutting down. However, HHS officials have acknowledged concerns about the CLASS program and have said they were considering changes to ensure its long-term fiscal health (California Healthline, 9/26).

In a letter sent on Friday to congressional leaders, Sebelius wrote there was not a "viable path forward" to implement the CLASS program while keeping it affordable and financially solvent. The administration estimated that although monthly premiums typically would have ranged from $235 to $391, they could have reached as high as $3,000 under some scenarios. Such premiums would have reduced the likelihood that healthy individuals would sign up for the program, which was scheduled to begin in 2013 (AP/New York Times, 10/14).

According to HHS Assistant Secretary for Aging Kathy Greenlee, federal requirements stipulate that Sebelius must certify that the program could remain fiscally solvent for 75 years. However, Greenlee said that Sebelius "could not meet that threshold" (Norman, Politico, 10/14).

Cutting CLASS Eliminates $86 Billion in Projected Savings

The end of the CLASS program eliminates an estimated $86 billion in savings that the health reform law was projected to generate, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 10/14). The overhaul is now expected to reduce the deficit by $124 billion between 2012 and 2021 (Aizenman, Washington Post, 10/14).

Announcement Prompts GOP Investigation

House Republicans on Friday said they will hold a hearing of the Energy and Commerce Committee's health and oversight panels to discuss why it took so long for the Obama administration to end the CLASS Act, "Healthwatch" reports. The committee -- which is scheduled to meet on Oct. 26 -- released a report last month alleging that the administration disregarded concerns regarding the sustainability of the program to inflate the projected savings of the federal health reform law.

House Energy and Commerce Committee Chair Fred Upton (R-Mich.) said the panel will hold the hearing "to get answers about why this sham was carried on for as long as it was, and what cancellation of the program means for the law's growing price tag" (Pecquet, "Healthwatch," The Hill, 10/15).

Democrats, Republicans Respond

Following the announcement, many Democrats indicated that they still intend to develop a "workable and affordable alternative" to address the issue of long-term care, while many members of the GOP revived calls to repeal the health reform law, CQ Today repots.

"The fact is that we still have a long-term care problem in this country, and despite the criticism received, the CLASS program was a creative attempt to address a difficult and growing challenge for American families," a spokesperson for Senate Health, Education, Labor and Pensions Committee Chair Tom Harkin (D-Iowa) said.

Meanwhile, Republicans said that simply shelving CLASS was insufficient and that Congress should vote to repeal the program.

Michael Steel, House Speaker John Boehner's (R-Ohio) spokesperson, said cutting the program "reinforces the need for the Senate to take up the House-passed repeal of the whole law, so we can replace it with common-sense reforms that will actually lower costs" (Ethridge, CQ Today, 10/14)