By Elizabeth Hovde / For The Herald
Nearly two-thirds of us in Washington state are living paycheck to paycheck. Even a slight majority of people earning more than $100,000 a year report living this way. And more people in the state may soon enter this paycheck-to-paycheck club.
Instead of the broad-based tax relief people are experiencing in many other states, as of July 1, Washington’s W-2 workers started to see an additional 58 cents taken from every $100 they earn.
This pay decrease is compliments of WA Cares, a partisan law passed in 2019 that created a payroll tax for a long-term-care benefit Washingtonians are being led to believe they can count on someday.
They can’t.
Instead of being honest about WA Cares’ many shortcomings, the state’s robust marketing campaign insists the program gives “peace of mind” about the future. It shouldn’t. And that messaging works against more people responsibly planning.
People earning $50,000 a year will pay $290 each year for the new tax. Workers with an income of $100,000 will take home $580 less, and so on. The money will go to a fund meant to pay for workers’ long-term-care needs, should they have them someday, if they qualify and if the fund remains solvent.
Long-term-care services include nursing homes, assisted living and in-home care, as well as meal deliveries, home modifications, assistive devices and so on.
Many state residents will, eventually, need these things. Creating awareness about that need has been the only benefit of this misguided law. But not all workers will need or qualify for the WA Cares benefit, and the money taken from them to invest in the program won’t help them with their other life needs, nor does it respect alternative ways of planning.
People who move out of state, even if they do need long-term care, can’t benefit. Workers who don’t pay the tax for at least 10 years without a break of five or more years are out of luck. Even people who do need long-term care who contribute long enough, keep living in Washington, and are determined by the state to qualify, will only receive up to $36,500. That lifetime benefit is inadequate for most people’s long-term-care needs.
The state has created a safety net for people in need and for people not in need. Inevitably, some low-income workers will be forced to pay for the long-term care of people with greater resources and higher incomes.
One thing WA Cares will do is have taxpayers pay wages for family caregivers and direct a pipeline of people to the Service Employees International Union through the law’s training requirement, which may explain why the SEIU 775 lobbied for this law.
Rather than create more government bureaucracy and dependency — harming workers in the process — state lawmakers and agencies should keep increasing awareness of long-term-care needs, protect Medicaid, (our current safety net for people in need), cut the state’s tax on insurance products and allow consumers more insurance choices.
Repeal efforts in past legislative sessions have gone ignored by Democratic legislative leaders who maintain solid majorities. But initiative campaigns are percolating, and I’m told we can count on a repeal effort again in 2024.
Nearly 500,000 Washingtonians found a better investment option and opted out during the state’s limited window of opportunity. More wanted to, but the state’s interference in the insurance industry made that impossible.
Maybe after months of pain felt by those living paycheck to paycheck, more lawmakers will understand that carving more from workers’ checks in the midst of inflationary times is not the best solution for long-term care.
Elizabeth Hovde is the director for the Washington Policy Center’s Center for Health Care.
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