Fate of Wash. state’s long-term care insurance program hangs on vote

The fate of a groundbreaking, first-of-its-kind public long-term care insurance program in Washington state – the WA Cares Fund – hangs in the balance as residents prepare to vote on whether they should be allowed to opt out of the program.

Initiative 2124 proposes to make the WA Cares Fund program optional. Backers suggest this gives workers more choice and financial freedom. Industry experts, however, say approval of Initiative 2124 would effectively kill the WA Cares program, which is intended to provide residents with access to affordable long-term care coverage.

Steve Cain, National Sales Leader, LTCI Partners, told InsuranceNewsNet he understands both sides of the argument. Regardless of the outcome of the vote, he said, the focus must be on ensuring Americans have the long-term care coverage they need.

Cain said there could be opportunities for partnerships between WA Cares and private insurers should the program remain intact. WA Cares representatives say they are already discussing how to create new LTCI markets with interested insurers if I-2124 fails and the public program can continue.

“I am a big believer in a public and private partnership to help people finance their long-term care needs, and I still think the need in Washington and around the country is tremendous. I do think that there’s room for both the private sector and these private insurance companies and the public program to work together,” Cain said.

WA Cares: Publicly funded LTC

The WA Cares Fund was first introduced in 2019 as an affordable long-term care option for Washingtonians. It’s supported through a mandatory deduction of 0.58% on every paycheck for working Washingtonians and allows residents to access up to $36,500 for long-term care needs once they retire.

This has been closely watched by other states and industry stakeholders alike. But GOP opponents have long pushed against it, slamming WA Cares as a “regressive tax” that does not provide enough support and denies workers the choice to opt in.

I-2124 proposes to make WA Cares optional. It was filed this spring and is being spearheaded by a conservative political action committee known as Let’s Go Washington. The initiative will be on the ballot during the Nov. 5 general election.

Choice vs necessity

Hallie Balch, director of communications, Let’s Go Washington, said I-2124 is about giving workers a choice. She described WA Cares’ mandatory salary deductions and eligibility guidelines as restrictive for residents, including for those who may not qualify for the program.

“Initiative 2124 is just offering workers a choice… It will allow people to decide what options work best for them and their families [and] it will save them money on their paychecks,” she said.

However, Cathy MacCaul, policy and advocacy director, American Association for Retired Persons (AARP), Washington, said I-2124 is “a wolf in sheep’s clothing.”

Actuarial models show that if I-2124 passes, WA Cares will collapse entirely because it will fail to collect enough contributions to work. MacCaul said the death of the WA Cares program would be a problem because most Americans have less than $5,000 saved through retirement — not enough to provide for their LTC needs and prevent them from becoming a burden on taxpayers.

“This initiative is very unfortunate. The backers say it helps individuals, but it actually does the opposite. The initiative harms individuals; it takes away long-term care benefits for nearly four million working Washingtonians. It’s going to increase the cost and the debt for millions of middle-income people [and] shift the burden back to the people,” she said.

MacCaul emphasized that WA Cares was created to avoid this issue. Ben Veghte, WA Cares director, added that the program has been making adjustments in response to public feedback and concerns. This includes making benefits portable out of state, and possibly worldwide in the future, and introducing a pathway to benefits for older workers who may not reach the 10-year minimum contribution period to qualify.

LTCI market opportunities

Veghte also revealed that WA Cares is working on partnering with private insurers to provide supplemental coverage options that could revive the thin LTCI market in the state. This has been a key talking point for all sides of the I-2124 divide.

Let’s Go Washington believes that making WA Cares optional, if I-2124 passes, would reignite the LTCI market as competition from a public program would be removed.

AARP Washington believes the opposite, however. MacCaul suggested that carriers left the state due to the heightened risk of covering an aging population, and that WA Cares “removes a significant portion” of that risk.

According to Veghte, WA Cares has already been having discussions about creating a new LTCI market with private carriers, and some have already expressed interest.

“We’ve presented this idea at a number of conferences and there’s been strong interest in having supplemental private coverage on top of WA Cares. It paves the way for a public-private collaboration where WA Cares covers the first tranche of risk. This could create a market for private insurers to offer supplemental coverage that’s much cheaper for them to price and market,” he said.

Cain opined that the private marketplace could become engaged again through such partnerships, although it would be challenging to “convince” people that WA Cares needs to be supplemented with private insurance.

“My hope is that private insurance companies get the opportunity to work alongside these public programs to deliver these solutions,” Cain said.

LTCI Partners is an American insurance brokerage firm. Founded in 2001, it focuses on long-term care insurance. Let’s Go Washington is a political action committee formed in 2022 to support ballot measures filed by GOP Wash. State Rep. Jim Walsh..

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Rayne Morgan is a journalist, copywriter, and editor with over 10 years' combined experience in digital content and print media. You can reach her at [email protected].