Long-term care: A view from the states

Medicaid expenditures continue to rise as a percentage of total state spending, and much of that goes toward long-term care.

In some states, Medicaid spending already has reached 40% of total state spending. A study conducted for the Minnesota Department of Human Services projected Medicaid expenditures for long-term care would increase 70% between 2023 and 2035.

With an increasing number of Americans needing care, states are looking at how they can mitigate these costs without any significant federal action. Roger Moore, policy director with the National Association of Insurance and Financial Advisors, gave a rundown of how the states are looking at funding long-term care during NAIFA’s Peak 65 Impact Day.

Washington state's long-term care program

Washington state enacted the nation’s first state-run, statewide long-term care benefit program, known as WA Cares. WA Cares provides a lifetime maximum benefit of $36,500, adjusted annually for inflation, which will be available beginning July 2026.

WA Cares is funded by a mandatory 0.58% payroll tax from all workers in the state, which began in July 2023, with certain exemptions allowed. A worker in Washington must contribute to the fund for 10 years before accessing WA Cares benefits.

In 2024, the state legislature passed a bill that would enable those who contribute to WA Cares but move out of state to access benefits.

In November, voters were given the opportunity to vote on Ballot Initiative 2124, which would have given workers the option to opt out of the mandatory payroll tax that funds WA Cares, which supporters of Washington Cares said would have led to the demise of the program. The initiative did not pass.

California looks at feasibility

In 2023, California’s Long-Term Care Insurance Taskforce considered the feasibility of establishing a program similar to WA Cares. The taskforce provided benefit options ranging from $36,000 to $144,000, with contribution rates between 0.6% and 3%.

The panel submitted findings to the California Department of Insurance in December 2023, although lawmakers have yet to come to a decision.

Minnesota eyes solutions

In 2023, Minnesota’s LTSS Funding and Services Initiative Study offered three possible solutions to address the state’s long-term care needs: care navigation and support services, a Medicare companion product, and an obligatory state insurance program. Minnesota has not taken any action toward a statewide LTC program.

“Ultimately, the problem is that funding long-term care is a big ask,” Moore said. “If you’re developing these big state programs, there’s concern over whether people want it, whether they will vote for it and how much will it cost.

“States have considered it but except for Washington, we haven’t seen anyone take that big dive yet.”

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.