Washington State LTSS Social Insurance Gains More National Attention

ANCOR is sharing this article by Politico: The Agenda as an update on this previous article. ANCOR is following the dialogue surrounding this effort because of disability supports such as those provided by our members fall under the long-term supports and services (LTSS) umbrella.

As written in Politico: The Agenda:

“As often happens with social policy, there is innovation emerging from the states to address the challenge – most significantly from the other Washington. Last month, Washington Gov. Jay Inslee signed a first-in-the-nation bill to help finance the long-term care needs of all the state’s residents. Washington state appears to be the first to find a way to make the math and the politics work, and its solution may provide a template for other states, and possibly the federal government, to follow.

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To understand Washington state’s experiment, it helps to revisit what happened when the Obama administration tried to tackle long-term care financing. Provisions of a bill originally called the Community Living Assistance Services and Supports Act were incorporated into Obamacare. Championed by the late Sen. Ted Kennedy, CLASS aimed to finance long-term care benefits for working-age disabled populations as well as the elderly. However, its good intentions were done in by its voluntary design: Benefits would be paid only to those who had opted into a payroll tax to finance them.

As we’ve seen in the years since Obamacare went into effect, mandatory insurance is actuarially desirable and politically torturous. On the other hand, voluntary insurance while more politically palatable, is sustainable only with big public subsidies. The CLASS Act was neither mandatory nor subsidized, so its fiscal future was doomed; Obama administration officials pulled the plug only a year after its passage.

Eight years later, Washington state’s solution, the Long-Term Care Trust Act, addresses the CLASS Act’s fatal flaw. It is old-fashioned social insurance, collecting funds from a broad population to pay for the future needs of those who need assistance. Workers will pay a mandatory payroll tax, but a small one: 58 cents per month for every $100 income starting in 2022. That works out to $18 a month for the average wage earner. These contributions will be banked in a trust fund. Although some benefits will be available to active employees and retirees starting in 2025, when fully implemented workers would be able to access their benefits (a lifetime maximum of $36,500 indexed to inflation) once they’ve paid into the program for 10 years and meet the medical system’s requirements for long-term care (usually defined as needing assistance with at least three activities of daily living, such as eating or bathing) .

Importantly, recipients can, to a large degree, decide how to spend the money. Funds dispersed by the state can be used for personal aides, outfitting a home, adult day care and residential care. Beneficiaries can also use the benefit to provide financial support to family caregivers. This is an enormous step forward, acknowledging that services and resources vary tremendously by local area — and that families, with the right supports, can keep loved ones at home longer and avoid expensive nursing home stays.

There are certainly reasons to fault the bill. Some might object to the premise of socializing the financing of long-term care. Others may take the opposite tack and claim the benefits are too skimpy, or note the risk of uneven administration. The bill’s original Republican sponsors withdrew their support from final bill, citing concerns about ‘costs to taxpayers.’

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So is Washington blazing a trail for other states when it comes to recognizing the need to finance long-term care? Perhaps, but Washington is no newcomer to paying attention to the needs of elderly populations. The state has been building a community-based long-term care system for over a decade, and has been recognized as having the best system of long-term services and supports of any state in the country.

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In contrast, Maine has one of the oldest populations in the country and a values system built on independence. A ballot referendum largely supported with out-of-state funds and organizing that would have raised taxes on higher-income households to finance the long-term care workforce went down to defeat last November. Hawaii has emphasized a cultural value of intergenerational care with its Kupuna Care program, which offers funds for family caregiving but services are paid for out of general revenues and subject to an eligibility waiting list.

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Whether federal policymakers will let this policy decision devolve to the states, or follow suit to establish a common program across the country for long-term care financing will depend in part on whether caring for the most frail members of our society is seen as an individual financial challenge to be financed with safety net programs like Medicaid, or a family and community responsibility to be encouraged with policies that promote savings and family caregiving.”