Opinion: Washington’s LTC Program Needs More than A Short-Term Delay

Amid an outcry from employees and employers calling for an overhaul or repeal of the program, lawmakers quickly held a hearing on a bill that would delay implementation of the tax until July 2023, and another bill that would allow for some more people to opt out of the program.

That's a good start, but it's not enough. Lawmakers must address all of the flaws with the long-term care fund, known as WA Cares, rather than simply delay the start of the payroll tax and allow for a few more groups of people to opt out of it.

The Legislature established the Long-Term Services and Supports Trust (LTSST) in 2019 to address a real issue: Not enough people have long-term care insurance. When they end up requiring care, the state is too often left to pay for services out of the general fund.

The original intent of the legislation was to allow employees to opt-out of the state program as they acquired their own long-term care insurance from other places, including the private sector. The state program would provide support for a short period of time until people became eligible for other programs such as Medicaid, and it would stimulate the private long-term care insurance market.

But changes made to the legislation since it was first adopted — including a bill that lawmakers passed in 2021 — have created a program that is unclear, insolvent and does not address the actual long-term care needs of Washingtonians.

The payroll tax that's intended to fund the new program amounts to 0.58% of wages, or approximately $435 per year for someone who earns $75,000, with no maximum cap. That's a lot of money coming out of people's paychecks, especially if some of them will never receive any benefit from it.

Among those who were stuck paying into the program without seeing a future benefit were workers close to retirement who couldn't vest, and employees who work their entire career in Washington and then retire to another state.

One of the bills the Legislature took up early in the session partially addresses the issue by allowing for a few more categories of people to opt out, but there are many more issues that need to be addressed, including the financial footing it now sits on. Last year, more than 450,000 people opted out during a brief window when they were allowed to exit, meaning fewer people are paying into the program. There are also systemic issues around workforce and the definition of long-term care, as well as insurance regulation issues that affect the health of a private-sector insurance market.

Lawmakers are right to push pause on the long-term care program this year. But it's critical that they use the additional time to work with employers, regulators and private-sector insurance providers to find real solutions to the real issues surrounding long-term care.

With an aging population, it's clear that how we plan for long-term care is something that's not going away. Simply pushing it off for 18 months is not a solution.

Kris Johnson is president of the Association of Washington Business, the state's chamber of commerce and manufacturers' association. He can be reached at krisj@awb.org.