The Washington State capitol in Olympia, cradle of the nation’s first comprehensive, public long term-care insurance program (Wikimedia Commons)
In 2019, the state of Washington plunged headlong into the treacherous waters of public long-term care insurance with WA Cares – the first comprehensive program of its kind in the country. WA Cares was born out of the realization that most seniors will need some form of long term-care at some point in their lives, but may not be able to afford the exorbitant costs – which can amount to tens – if not hundreds – of thousands of dollars per year. Policymakers wanted the state to be prepared for the swelling number of Baby Boomers who would eventually require care but not be able to pay for it on their own.
The need for government-sponsored long-term care insurance has become increasingly obvious. The private long-term care insurance market is in retreat. Private policies are expensive and hard to find. Many people falsely believe that Medicare covers long-term care, but it doesn’t (except for a limited amount of time after hospitalization or acute illness). Nonetheless, a recent AARP survey indicates that 78% of voters think that Medicare pays for extended long-term care.
“Middle-income families do not anticipate how much long-term care is going to cost. Unless they have extra financial resources, they’re stuck with the cost of long-term care. And their only alternative is to spend down to poverty and go onto Medicaid. This is about giving people a choice about how they want to age and live out their lives when they need long-term care.” – Cathy MacCaul, advocacy director at AARP Washington, 1/26/22
AARP Washington was a prime mover in the creation of WA Cares, working with Governor Jay Inslee, the state Department of Social and Health Services (DSHS), other members of the advocacy community, and Democratic state legislators. The coalition celebrated the enactment of WA Cares three years ago, only to run into severe political turbulence today.
The current controversy surrounds the .058% payroll tax to fund the program, which was imposed beginning January 1st, 2022. Republicans insist it’s a burden for taxpayers – a bad deal – and claim that the program is insolvent, none of which is true. (More on that below.) Nevertheless, the legislature has voted to suspend the payroll tax for 18 months, and is in the process of revisiting the original law.
“Democrats hope by then to erase concerns about the future solvency of their initiative to provide workers with money to defray the costs of long-term care. Republicans hope by then to kill the program as now designed, and maybe replace it with something else.” – Forbes, 1/9/22
Advocates acknowledge that WA Cares was not properly marketed to the public once the law was enacted in 2019. In fairness, the COVID pandemic came less than a year later, shoving other issues aside. Suddenly, people were talking about seniors dying from COVID, not WA Cares. Advocates say the ‘messaging vacuum’ gave the program’s conservative opponents (including the private insurance industry) an opportunity to sweep in and turn the public against it.
“We were caught not controlling the narrative,” says AARP Washington’s policy director, Cathy MacCaul. “The first message consumers got was, ‘This is not good,’ with no context, without any information regarding the actual need for public long-term care insurance.”
While Republicans pledge to use the year-and-a-half delay to “kill” the program, advocates view the 18-month hold as an opportunity to improve the law. Similar to the Affordable Care Act, WA Cares’ authors knew that the original law wasn’t perfect and would need adjustments. Targeted improvements include ensuring that near-retirees can access benefits – and enacting payroll tax exemptions for people who worked in Washington state but moved elsewhere, military spouses, and some veterans.
MacCaul compares the program to a train that needs a fresh coat of paint. “Do you try to paint the train while it’s rolling down the track, or do you stop the train and paint it? We think it makes sense to hold the train, look at all the data we’ve accumulated, and make sure everything is in place that the program needs.”
WA Cares provides a $36,500 lifetime benefit for those who paid into the program for ten years and need long-term care at some point in their lives. The benefit is to be paid directly to providers by DSHS. With the .058% payroll tax, a resident earning $50,000 in annual income would contribute less than $300 per year in exchange for the long-term care benefit. It’s a classic social insurance model, patterned after Social Security and Medicare Part A. MacCaul says actuarial projections indicate that, with the payroll tax revenue invested in U.S. treasury notes, WA Cares will remain solvent until at least 2075, contrary to Republicans’ claims.
To the GOP’s argument that the $36,500 benefit is “insignificant,” MacCaul responds that while a few months of nursing care can cost that much, the benefit also applies to less expensive in-home care. “The benefit might be put toward 4-5 hours a day of in-home care for more than a year. It could be used for a home modification for a patient with disabilities, for home-delivered meals, or to pay a family caregiver,” she says, reflecting a newer, broader concept of long-term care beyond sticking seniors in nursing homes.
AARP’s October, 2021 survey suggests the need for more public outreach about the positives of the WA Cares program. In that survey, 51% percent of voters supported the program, 33% opposed it, and 15% were unsure.
“Support for the program increases as people learn more about the specific features of WA Cares and how it differs from what is currently available from private long-term care insurers.” – AARP Survey, October, 2021
The absence of a federal long term care insurance program has left individual states like Washington to explore solutions on their own. The National Committee to Preserve Social Security and Medicare has long advocated for a federal program. There have been efforts in Congress, most recently from Rep. Thomas Suozzi (D-NY), to craft federal long-term care legislation, but so far those efforts haven’t gained traction. (The ill-fated federal CLASS Act, enacted under President Obama, would have provided consumers with help paying for long-term care, but proved to be financially infeasible and had to be shut down in 2011.) While advocates continue to press the federal government to enact a long-term care program at some point in the future, Washington state is doggedly leading the way.