Adverse selection and the CLASS Act

Abstract

A proposal in the House and Senate healthcare reform bills, the CLASS Act, establishes a federal long-term care (LTC) program financed from participant premiums without any federal subsidy. The new LTC program is subject to guaranteed issue, and that, combined with its voluntary nature, subjects the CLASS Act to considerable adverse selection risk. This paper by Al Schmitz examines this risk while considering other likely consequences.


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Image: Allen Schmitz

Allen Schmitz

Milwaukee, Wis.

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