Taking income from today’s lower-wage workers for a future benefit they may never need or qualify for is not wise, fair or compassionate. But that’s what Washington state’s 2019 long-term care law will do. It should be repealed.
Beginning in July 2023, W2 workers — including those with lower incomes, struggling to make ends meet — will be subject to a payroll tax of 58 cents for every $100 they make to fund a long-term care program called WA Cares. Their income will often be taken and given to people who have greater means to pay for home- or nursing-care services.
This poorly conceived law creates a safety net that is far too wide, wasting precious resources on those not in need.
Before it even begins, WA Cares is a program with solvency problems. And its marketing gives Washingtonians false assurances. My analysis shows the long-term care law also caused insurance industry disruption, mass confusion among taxpayers and that it set up a potentially profitable monopoly for a politically connected union.
Nearly 500,000 Washingtonians have taken advantage of an exemption available for those who had private, long-term care insurance (LTCI) that was purchased by Nov. 1, 2021. A lot of other Washingtonians didn’t know about the opt-out provision, as it was kept largely in the dark. Still others attempted to opt out and hit a dead end when seeking a private plan, as the LTCI industry came to halt under state competition and interference.
Washington workers are rightly doubtful they will ever benefit from this long-term care program they are being taxed for. Vestment criteria will rule many people out of the already inadequate $36,500 benefit for long-term care needs, and glaringly unfair qualifications add to the doubt.
If you move out of state, regardless of what you pay in payroll taxes during your working years, you are ruled out of the benefit. Deteriorating health criteria set by the state also will make some people who need assistance with the activities of daily life ineligible. Failure to do W2-based work 10 years in a row without a five-year break also kicks you to the curb. This will be a hurdle to qualification for the very people this law is in part set up to help: family caregivers of people in need of long-term care. It’s also a hurdle for gig workers and people who spend part of their working years being an at-home parent.
There is a better way than putting even low-income workers on the hook for everyone else’s long-term care costs. We have a state safety net for people in need: Medicaid. Lawmakers should repeal this law and protect Medicaid from abuse that is causing budget bloat.
Know that with an inadequate lifetime benefit for long-term care costs, some people will still find themselves using Medicaid when $36,500 runs out in a matter of months. And this law could bring even more people to Medicaid dependence, as the state is wrongly assuring workers that their long-term care needs are now covered.
State lawmakers should also cut the state’s tax on insurance products and allow and encourage more competition in the market to help make LTCI insurance more affordable and attractive.
The mess WA Cares has brought us has one silver lining — more people are now aware that one day they might need long-term care.
Raising awareness and encouraging financial planning for this possible life need — and others — is an appropriate role for government. What is not appropriate is for the Legislature, in the midst of record inflation, to add a $30 billion burden to workers for an insufficient benefit they do not want, in the hopes of realizing $1.2 billion in savings for the state over 30 years.
WA Cares is far from caring.
Elizabeth Hovde is the Washington Policy Center’s Center for Health Care director.