Commentary: Time to replace long-term care law

The first order of business for Washington’s Legislature in Olympia is replacing the state’s new long-term care law. It is fatally flawed.

Gov. Jay Inslee and Democrats who control the state legislature wisely postponed implementing the sweeping “Long-Term Services and Supports Trust Program,” but it is beyond repair. It is time to find a better alternative.

The new law, also known as the Washington Cares Act, is a mandatory, public, state-run long-term care insurance program. Beginning Jan. 1, Washington employers are supposed to withhold a new payroll tax ($58 per $10,000 of wages) to fund it. Even then, some paying the tax will not receive benefits.

Employees had until Nov. 1, 2021, to find alternative insurance or they were automatically enrolled in the state program with no future opportunity to opt out. Taxes were to be sent to the state’s Employment Security Department (ESD).

The WA Cares Fund would provide up to $36,500, or $100 a day, for services and support to those who qualify for long-term care, including in-home care, assisted-living facility stays, memory care, transportation, adaptive equipment, and respite for family caregivers.

Qualifying for benefits is complicated, and some paying the tax won’t receive a dime. For example, if they plan to retire in the next four years, they would be taxed but wouldn’t qualify for benefit payments, which start in 2025.

Another problem is funding. “The State Actuary of Washington concluded that the program will not raise enough money to pay the promised benefit, making further tax increases and larger cuts into employee wages inevitable,” wrote Dr. Edmund Schweitzer, founder of SEL, Pullman. The program is underfunded by $15 billion.

The need to address long-term care is growing. According to estimates, the U.S. Department of Health and Human Services (HHS) figures 69% of the U.S. population will require long- term care services for an average of three years. Washington Care covers one year.

The U.S. long-term care market was roughly $430 billion in 2019 and is expected to increase by nearly 7% a year through 2027, Grand View Research determined. Demand for long-term care has increased with the growing recognition of unmet elderly needs, which were fulfilled by hospitals.

The American Association of Long Term Care Insurance estimates more than 8 million U.S. citizens have long-term care insurance; however, it is expensive. The average long-term care insurance policy costs $2,466 per year for a couple at age 55; but, if that same couple purchases a policy at age 60, their prices rise almost $1,000 to an annual average of $3,381.

Long-term care needs to be portable. Most importantly, people paying the premiums need that money placed into an account that provides long-term care benefits regardless of the state or country of residency. Washington Cares requires Washington residency.

“Many of our Washington-based employee-owners are Idaho residents. They would pay the tax, but not ever benefit from it. Unlike participants in a true, private insurance program, these employees will have their monthly premiums collected, then distributed by the state to others,” Schweitzer added.

“This law has created a dynamic where people are buying insurance not for planning purposes, as they’re intended to be used, but for tax avoidance purposes,” Spokane-based insurer David Wolf told the Spokane Journal of Business.

The replacement for the defective statute must have greater options that better fit people’s needs. That provision should take precedent. Lawmakers need to encourage private carriers to write long-term care coverage that is flexible and affordable.

Our state elected officials must toss out the current state law and implement a workable replacement before adjourning.

Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business and lives in Vancouver.