Washington State is First-in-the-nation for Getting it Wrong on Long-term care
“If you can't be a good example, then you'll just have to be a horrible warning.”
— Catherine Aird
Taxpayer-funded safety nets should be reserved for people in need, not widened for people not in need. But Washington state lawmakers have decided otherwise when it comes to long-term care.
In a partisan move, the 2019 Washington state Legislature passed a law to start a new social program that is meant to be funded by a payroll tax of 58 cents on every $100 a worker makes.
Starting July 1, a worker making $50,000 a year will have $290 extra dollars taken away each year, while a person making $100,000 loses $580 and so on, with no income cap. Someday, a person who is heavily invested in this program can apply for an inadequate lifetime benefit of $36,500 to use for long-term-care services — if the worker actually needs long-term care, has paid in 10 or more years without a break of five or more years and has health needs that qualify them under the state’s definition as a person needing assistance with daily-life activities. If you’ve paid into what's being called the WA Cares Fund your whole working life yet no longer live in Washington state when you need long-term care, you’re out of luck. The benefit is not portable, no matter how much you’ve been required to contribute.
The plan is intended to save the state money on the long-term costs associated with its Medicaid program, and it places taxpayers on the hook for paying the wages of home caregivers. That includes family members.
Service Employees International Union 775, a union representing long-term-care workers, lobbied heavily for the law, remains a primary supporter of it, and will be giving state-required training to new caregivers who hope to receive taxpayer money from the fund.
Taxpayers, seeing the burden, ulterior motives and unfairness of the law, have been asking the state to repeal it since its inception. First, they tried with an advisory vote that lawmakers could ignore (and did). Then, voters turned down a funding measure meant to help the plan along. Most recently, they urged legislation that had the support of many lawmakers but that was shut down by the state’s majority party.
Our population is graying and growing. People are living longer. And more elderly people are using long-term-care services to help them with activities of daily life. Many are also relying on the government to provide their long-term-care needs, driving up state costs. It’s no secret in Washington state that hiding one’s assets is a part of some people’s financial planning near the end of life, so they can qualify for Medicaid long-term-care help instead of paying their own way.
Instead of creating awareness about the issue, cutting taxes on insurance products, encouraging savings and discouraging reliance on Medicaid, which is meant for people in need, Washington state lawmakers chose to become the first state in the nation to create a long-term-care safety net for people in need and people not in need.
Now lawmakers in other states are watching to see how the Washington state test case goes. Some state legislative bodies, like New York and Pennsylvania, have already seen proposed legislation similar to Washington’s misguided House Bill 1087.
If they’re watching at all close, they should be able to see there’s been a lot of stumbling over WA Cares. The law's implementation was delayed, because of its many flaws. It was so poorly written it excluded some people and included others — getting it wrong on many counts. Even people who lived out of state and would never use the benefit were going to be taxed. The law was amended to fix that, under threat of a lawsuit from a neighboring state.
The law also allowed for a controversial and limited opt-out provision for a short time that many people didn’t know about. Still, nearly half a million Washingtonians jumped through the hoops, obtained a private insurance plan for long-term care and were exempted from the coming payroll tax. That further threatened the fund’s projected solvency, which was already in trouble given the voter rejection of the funding measure mentioned earlier.
Misleading marketing from the state has accompanied this coming tax. The state keeps telling people who won’t benefit from the taxpayer dollars that they can have “peace of mind” about future long-term care. That could discourage people from saving appropriately for the life need.
Note to states: Washington state has created a long-term mess, and its new payroll tax will take money away from low-income workers and give it, in some cases, to people with means. This long-term-care cost-shifting does not have support. It shouldn’t.
If you can’t be a good example, you might get to be a horrible warning. States should resist following Washington state's lead. Its long-term-care law has the potential to hurt more people than it will help.
Elizabeth Hovde is the Director for the Center for Health Care at the Washington Policy Center.
