Wash. state long-term care insurance faces ballot question threat

By Doug Bailey

A unique benefits plan in Washington state to provide public long-term care insurance for residents is in danger of dying on the vine by a November ballot question that would allow voters to opt-out of the groundbreaking program.

The state in 2019 approved the first-in-the-nation Washington Cares program and last year began collecting a 0.58 percent payroll tax from employees to support the plan. Since then, 14 other states are considering adopting similar plans to help with the very real need for access to long-term care insurance, the cost of which is exploding.

Meanwhile, 2024 will be a record-breaking year for retirement in the U.S., with an average of more than 11,000 Americans a day expected to turn 65 – or more than 4 million this year. Many of those boomers will need long term care in the future and there’s big questions looming about the availability of insurance plans and how to pay for them.

“Long-term care in this country is a patchwork of public and private components without a common definition,” says Bonnie Burns, of the California Health Advocates, a nationally recognized expert on long term care finance. “And there isn't a good financing system for that kind of care. We have a looming public policy challenge with more and more people turning 65 and later needing long-term care services.”

The Washington Cares plan would provide aging individuals with $36,500 over their lifetime for long-term care costs.

Supporters of the referendum, Initiative 2124, say they only want to make participation in the insurance plan voluntary, rather than mandatory. Critics, which include the hedge fund manager that bankrolled the initiative, Brian Heywood, also say the tax is too high and the benefits too low.

The state sponsor of I-2124, Republican Rep. Jim Walsh, said he only wants to allow people to opt out of the benefit plan, which he says is already insolvent.

“Under current state law, working people must pay into the program in the form of money taken out of their paychecks,” he said. “The initiative simply lets people opt out if they choose. It defends consumer choice and encourages transparency in state programs.”

But turning the program voluntary will probably kill it because it would severely limit the pool of those contributing, thus destroying the very nature of how an insurance program is supposed to operate.

“Insurance works when you pool large groups of people together that ideally have diverse needs,” said Dr. Norma Coe, Director of Research at the Leonard Davis Institute of Health Economics. “Premiums can stay lower the larger the pool of people are. That’s how Medicare and Social Security works. However, once the pool becomes small, and people are selecting insurance based on their own risk profile it actually breaks down the entire insurance market. Premiums will have to increase. As the healthiest people leave the market, the premiums have to increase yet again. And it doesn't take long before the entire program collapses. This is called the dynamic death spiral of insurance.”

Consumer groups, the state chapter of AARP, long-term care providers, and unions have joined together in opposition to the referendum, but they are being outgunned by Haywood’s organization, Let’s Go Washington, which has spent nearly $8 million trying to defeat the ballot question and other tax cutting initiatives. Opponents know they have an uphill battle fighting a tax cut initiative with the slogan “Vote Yes, Pay Less.”

Jessica Gomez, director of the We Care for WA Cares Coalition says at the current rate, only hedge fund managers will be able to afford long-term care insurance.

“The hard truth is that if we continue choosing not to plan forgo long-term care, we may pay less now, but we will end up paying much, much more when we are in crisis, needing long-term care, and can least afford it,” she said. “Experts across the nation studied the long-term care crisis and came up with the same solution: a publicly funded long-term care benefit for all. We cannot go back to square one, where working Washingtonians are forced to spend down their life savings to $2,000 or less in order to qualify for Medicaid.”

Consumer groups and health care advocates also worry that the Washington vote could quell similar measures in other states.

“People don't understand long-term care,” said Burns. “They don't understand the need for financing or how it works and it's a giant issue that's going to show up later in our tax bases because either we're going to find a way to pay for it through this kind of a program or we're going to pay for it through Medicaid because it is going to have be paid for somehow as people age and increasingly and are a larger percentage of every state's population.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].