• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • The Senate Health Bill: Medicaid and CLASS Act Provisions

    The 2074 page Reid Health Bill (H.R. 3590) generally follows the Senate Finance and HELP versions on Medicaid and in the creation of a new health care program, the Community Living Assistance Services and Supports (CLASS) Act.

    Curiously, in the short term (2010-2013), the Reid bill helps fewer people gain coverage than the Senate Finance bill. The Congressional Budget Office (CBO) estimates 2 million will lose Medicaid/SCHIP coverage each year in this period compared to current law. But, by 2019, Medicaid/SCHIP enrollment will increase by 15 million, accounting for nearly half of all individuals who will gain coverage.

    More Welfare. The Reid bill expands Medicaid eligibility for people below 133 percent of the Federal Poverty Level (FPL), significantly changing it to a pure income based federal entitlement. It also raises, then lowers, the federal matching rates for different populations and states. In a provision aimed at Louisiana, the Reid bill provides a special “disaster recovery” match rate for states that have had a major disaster declared (Section 2006). CBO estimates that state spending under the Medicaid provisions will still increase by $25 billion.

    Of course, there are millions of persons at or below 133 percent of the federal poverty level who get private health insurance. The Reid bill would, based on all previous experience, guarantee a further crowding out of private health care coverage.

    States will be alarmed at the aggressive encroachment of federal authority over the management of the Medicaid program. The provisions of Section 2801, Medicaid and CHIP Payment and Access Commission (MACPAC) are clearly intended to increase federal officials’ direct control over the program. In addition, states will become vulnerable to federal lawsuits by individuals under the expanded definition of medical assistance provided in Section 2304. This will likely be used to overturn recent federal court decisions won by states that limit private lawsuits against them.

    The Reid bill will allow legal immigrants who have been prohibited from receiving public benefits, including Medicaid, for 5 years from the date of entry into the U.S. to become eligible for the new federal subsidies. Curiously, this raises an equity issue that has been overlooked: there would be 60 million U.S. citizens excluded from the new, generous federal subsidies. Instead of receiving the new subsidies, the Reid bill would create a rigid, two-tiered system of health care. Individuals at the lowest income levels would be forced into Medicaid, while individuals at higher income levels will qualify for generous subsidies worth more than Medicaid on a per capita spending basis. The Reid bill further promotes this class- based inequity by allowing non-citizens to secure the federal subsidies while lower income Americans cannot.

    A New Program. Despite concern and criticism that the CLASS Act is not fiscally sound over the long term, it has been included as a budget gimmick. The federal government will collect revenues for 5 years before paying out any benefits. This allows the Reid bill to offset the cost of the Senate bill by $72 billion over 10 years.
    The CLASS Act would create a new federal program for long-term care insurance to compete against private insurance. Individuals who have paid into the program for 5 years who experience limitations in their activities of daily living will become eligible for cash benefits. These limitations do not meet the current disability test which opens the program to abuse.

    Posted in Ongoing Priorities [slideshow_deploy]

    12 Responses to The Senate Health Bill: Medicaid and CLASS Act Provisions

    1. Bobbie Jay says:

      STOP THIS collection of corrupting clowns!

    2. Pingback: H.R. 3590: The Patient Protection and Affordable Care Act « The Western Experience

    3. Pingback: ABC News: “The $100 Million Health Care Vote?” | Conservative Principles Now

    4. Pingback: Trend Spinner » The Green-Stained Fingers Of Mary Landrieu

    5. Pingback: Morning Bell: A Health Bill Nobody Believes In | Conservative Principles Now

    6. Jon D'Angelo says:

      CLASS Act would be the biggest benefit to help the disabled community in years. The goal is to raise disabled people to a level with able bodied where we can seek employment without fear. Not only disabled citizens but disabled Veterans too would be able to live freely and seek the American dream. Basing eligibility off ADLs is the rather than work status not only lets the community actually be productive members of society rather than just sitting at home or in a nursing home. The max benefit of $100 a day would only cover 2/3rds a severely disabled person's costs.

    7. Pingback: Congress on Health Care: Sticking It To The States | Conservative Principles Now

    8. jackie, new york says:

      Article is bias…heritage foundation is a conservative think tank….not worth paying attention to it….they are funded by special interests in favor of the elite who rules inside special interests.

    9. Weiwen Ng, MPH says:

      The CLASS Act uses the same benefit triggers as most private long-term care insurance contracts. Furthermore, disability in ADLs would have to be certified by a licensed clinician. In that sense, the author is incorrect to say that the program is open to abuse.

      I assume the "disability test" the author referred to was the SSDI disability test, which is fairly strict and is geared towards working adults. The ADL scale is geared more to the disabilities that seniors typically face.

      As to concerns over the financing, my opinion is somewhat mixed. The financing structure is identical to Social Security. The CLASS program has its own dedicated funding stream, like Social Security. The deficits that Social Security produces are manageable. That said, a declining ratio of workers to non-workers is always a worry for any pay-as-you-go funded social insurance scheme. There's a good argument for Social Security and the CLASS Act to be financed pension-style. Furthermore, the CLASS Act should probably be made mandatory – although mandatory programs would drive the Heritage Foundation nuts, they would get rid of the adverse selection problem.

    10. Pingback: A Guide to the Senate Vote-O-Rama: Part Two | The Foundry: Conservative Policy News.

    11. Jack Cameron says:

      It's another tax, another entitlement program and at best will not resolve anything other than taxing benefits and paying out very small amounts of money, if any

    12. Mia Pockett says:

      This article seems a little bit biased. It seems like we are not going to get much money out of the government soon, which is amazing for the amount of taxes we are all paying!

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.