The Congressional Budget Office (CBO) was asked to take a look at the numbers behind a proposed federal long-term care insurance program. The proposed program, called the Community Living Assistance Services and Supports Act (the CLASS Act) is currently under consideration by the Senate Committee on Health, Education, Labor, and Pensions.
On his blog, CBO Director Douglas Elmendorf states that the program would result in a decrease of $58 billion in the federal budget deficit from 2010 to 2019. He then says:
CBO expects that the HHS Secretary would need to reduce benefit payments and increase premiums to maintain the program’s solvency. Assuming that the premiums and daily benefit amounts were $65 and $75, respectively, CBO estimates that benefit payments would exceed premium income within the first decade after 2019, leading to depletion of previously accumulated premium reserves (and accumulated interest on those reserves).
He concludes by saying:
CBO estimates, if the Secretary did not modify the program to ensure its actuarial soundness, the program would add to future federal budget deficits in a large and growing fashion beginning a few years beyond the 10-year budget window