Initiative 2124 would make the WA Cares insurance tax optional

Patricia Keys, 62, lived alone in Kent. Fiercely independent. Full of life. Then a stroke hit her with no warning. She fell on a hardwood floor, striking her head. Patricia would never walk again, and lost her independence.

She moved in with her daughter Christina Keys in Vancouver, Washington. Christina had to leave her job and become a full-time caregiver. She took care of her mom for the next 10 years, until Patricia died in 2022 at 72.

Seventy percent of Washington's residents will eventually face a similar experience, needing to take care of a relative — or being the family member who needs help — estimates Ben Veghte, director of the state's Washington Cares long-term care insurance program. It's an inevitable aspect of getting old, although some younger people can end up in the same situation after an accident.

"That changed her life and changed my life. … We don't know when [a debilitating accident or illness] is going to happen," Christina Keys said in an interview with Cascade PBS.

Washington is building its first-in-the-nation government-managed long-term care insurance program for people like Patricia and Christina Keys. In July 2023, the state began collecting 58 cents for every $100 on every paycheck covered by a W-2 form. That translates to about $24 per month for someone making $50,100 a year, which is a typical Washington income, according to Washington Cares.

Starting July 1, 2026, anyone who pays into the new state program through the paycheck tax can tap into the new state WA Cares fund (currently at $1.37 billion) to get up to $36,500 in their lifetime to help pay for health care equipment or related needs, like a wheelchair ramp.

Roughly 3.9 million Washington residents are paying into this fund, according to a Washington Office of Financial Management analysis.

While the new program is off to a solid start, its future is shaky. Conservatives, led by Republican Party chairman and State Rep. Jim Walsh of Aberdeen and the organization Let's Go Washington, have put Initiative 2124 on the November ballot to make this program voluntary instead of mandatory. Supporters of the program say making it voluntary will destroy its financial viability because like any insurance program, it requires a lot of people paying into the system to support the fewer people collecting payouts.

This long-term care is not medical care. It covers items such as installing grab bars in bathrooms, home-delivered meals, wheelchairs, wheelchair ramps and other things to help an ill or disabled person with everyday living. "Most people want to stay in their home or stay in their community if they can. … It helps families prepare for the inevitable," WA Cares director Veghte said.

"The cost of long-term care is going to come at you at one time or another," said Justin Gill, a nurse practitioner and president of the Washington State Nurses Association.

"That changed her life and changed my life. … We don't know when [a debilitating accident or illness] is going to happen," Christina Keys said in an interview with Cascade PBS. Christina and her mother Patricia are beneficiaries of Washington Cares, our state's government-managed long-term care insurance program. (Courtesy of Christina Keys)

About 800,000 people in Washington are in some type of caregiver role, says Cathy MacCaul, advocacy director for AARP Washington. The majority of those caregivers are women, according to a MetLife analysis.

The chances of needing long-term care significantly increase after age 80, according to an AARP report. Right now, baby boomers — the largest generation in the United States — make up the biggest portion of caregivers. But in 2026, the oldest boomers will reach 80, starting a shift away from being caregivers to being care receivers, the report said; the number of Washingtonians needing long-term care help is expected to grow.

And WA Cares is set up to follow that trend by providing more assistance where it is needed. "It's designed to have a modest premium for a modest benefit," adds MacCaul.

Republican legislators voted against this program when it was created in 2019. Due to the pandemic, both parties voted in 2021 to delay collecting from paychecks until 2023.

Walsh and Hallie Balch, spokeswoman for Let's Go Washington, contend that if Washington Cares is as good as its supporters say, they should not be worried about people opting out, which is already allowed but is much more complicated than the process the initiative proposes. Supporters of the initiative also say $36,500 is an insufficient sum for what would likely be many years of long-term care expenses.

So what happens if Initiative 2124 passes and participation in Washington Cares becomes voluntary?

"We can't predict the future on how many people will drop out and their income levels," Veghte said.

If a high number of participants drop out, that will force the premium to increase, Henry Aaron, an economist with the Brookings Institution of Washington, D.C., told the Washington Senate Labor and Commerce Committee on May 14. An Office of Financial Management analysis says that if enough people drop out of Washington Cares, it could become insolvent as early as fiscal 2027.

The initiative "is a bit of a wolf in sheep's clothing. It destroys the program. It makes it financially insolvent," MacCaul said.

Balch and Walsh believe the program is already in financial trouble, without enough money to handle claims submitted to the state after July 1, 2026. "Currently, the program is insolvent," Walsh said.

Washington Cares responds with a 2022 analysis by the Milliman health care and insurance consulting firm that determined Washington Cares is expected to be solvent through 2097 if the premium is kept steady between 52 and 63 cents per $100 of income.

Walsh, who has issues with the way the program works, is also calling for an outside regulator to keep tabs on Washington Cares' expenses. According to Walsh, someone has to pay premiums for 10 straight years to get full benefits; this penalizes people who drop out of the workforce for a few years prior to the 10-year milestone. But Washington Cares rules state that participants are eligible for partial benefits in their first few years in the program and someone can drop out for a maximum of five years at some point and still hang on to their benefits.

Walsh said the 2019 law allows the payroll premium to be raised without legislative approval, removing a legislative safeguard against a premium increase.

The state code stemming from the 2019 law says a pension funding council will decide every two years whether to raise the premium above 0.58 percent, following an analysis by the state actuary office. Then the Legislature would vote on the recommended increase. The pension funding council must adjust the premium to the lowest rate to keep the Washington Cares fund solvent. If a premium rate is increased, the Legislature must notify each individual covered by Washington Cares to describe the increases, the reason for the increase, and a plan for returning the new rate to 0.58 percent.

Correction, October 3, 2024: An earlier version of this story incorrectly stated how the increase to the premium is determined.

Correction, October 7, 2024: A sentence that clarifies the process for determining the increase to premiums has been added.