Tuesday, February 1, 2011

New paper: “What Is ‘CLASS’? And Will It Work?”

The Center for Retirement Research at Boston College has released a new Issue in Brief: "What Is 'CLASS'? And Will It Work?" by Alicia H. Munnell and Josh Hurwitz

The brief's key findings are:

  • Long-term care is the major uninsured expense for most retirees.
  • CLASS is a new, voluntary, national program designed to:
    • alleviate the need for families to impoverish themselves to qualify for Medicaid;
    • reduce the burden of care on families; and
    • offset a bias towards institutionalization.
  • The primary challenge to CLASS is adverse selection – participation mainly by the less healthy.
  • To avoid a death spiral of rising premiums and declining participation, major program changes are needed.

The brief is available here.

Editor's note: when the key findings contain the words "death spiral," you can usually conclude the answer to the "Will it work" question is, at least as currently configured, "no."

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