Washington Voters Retain Public Long-term Care Insurance Coverage

Walker Methodist resident Minnie Meyer receives some tender loving care from nursing assistant Devika Patel of Swanston Nursing Care Facility in Illinois (Photo By Judy Griesedieck/Star Tribune via Getty Images)
Washington voters decided on Tuesday to uphold their state’s groundbreaking public long term care insurance program by easily rejecting a ballot initiative to repeal it.

The WA Cares Law offers up to $36,500 in long-term care benefits annually; with inflation adjustments. Funded through a payroll tax surcharge of 0.58 percent on workers across the state – on an estimated median income worker earning around $78,000 this would translate into approximately $450 annually or $9 per week for benefits coverage.

Let’s Go Washington was sponsoring four ballot measures led and funded primarily by Brian Heywood, an influential hedge fund manager from California. Out of 79 percent of votes counted so far, Measure 2124 failed by approximately 55-44 percentage.

Wide Repercussions This defeat will likely have far reaching ramifications outside Washington state. States such as California, Illinois, Minnesota and Massachusetts have been exploring public long-term care financing ideas similar to Washington’s initiative; had that passed instead, those states might well have reconsidered whether an universal tax-funded public program can ever work politically.

Perils Of Voluntary Insurance
Washington’s voluntary participation measure for WA Cares would have made its participation optional; seemingly unobtrusively so. But had strict medical underwriting criteria been implemented by state authorities, such an initiative may well have decimated this program entirely.

One estimate suggests that as many as three-fourths of workers in the state might have dropped out, most often young, higher income or healthier employees. It could have become financially insolvent as soon as 2027 without a broad risk pool to share risks across. Insurance works when there’s both those who will eventually need benefits as well as those who won’t ever claim them; that is how insurance works!

Congress established the CLASS Act voluntary public program in 2010, yet its premiums would prove unacceptably high for most families. Meanwhile, private long-term care insurance has struggled to remain financially sound without experiencing significant premium increases because its risk pool remains so unsteady.
Over half of those over age 65 will require substantial long-term care before their deaths, yet few know if a tax-funded, universal public program like the Medicaid or Social Security can really meet that need. A key reason tax-funded programs work affordably is due to this uncertainty: few know if and when they might eventually need long-term assistance when paying into them (usually during their 20s).
First Mover WA Cares was implemented in 2019 and workers began paying taxes beginning January 20, 2023, and benefits will begin being distributed starting July, 2026. Benefits generally accrue to those who have paid into the system for at least 10 years but there may be exceptions such as medical emergencies requiring emergency attention as well as limited benefits available for those contributing under 10 years.
Washington was the first state to implement a public long-term care insurance program and as such has seen its share of challenges and setbacks. An one-off exemption offered until November 1, 2021 encouraged hundreds of thousands of state residents to buy private long-term care coverage before that deadline was up in order to avoid paying tax penalties on it.
Many low-cost and short-term policies offered low benefits and would provide little support during an average spell of long-term care needs, and many who purchased coverage reportedly dropped it shortly afterwards.
WA Cares may have its drawbacks; I prefer catastrophic public programs to front-end plans like Washington’s; however, WA Cares was an integral first step towards developing much-needed public programs to solve long-term care financing. Now that voters in Washington state endorsed it, it will be interesting to observe whether other states follow.