Editorial: Opt-out of WA Cares would cost most more later

By The Herald Editorial Board

For a little more than a year now, most of us have being paying into WA Cares, a social insurance program — similar to how Social Security works — that makes a modest payroll deduction in exchange for eligibility for a benefit that can provide for some of a person’s long-term care needs later in life.

The program was created by state legislation in 2019, intended to supplement what families’ income, savings and insurance can provide when long-term services and supports are needed for older or disabled state residents.

Most of us will need that help.

A federal Department of Health and Human Services report determined in 2022 that “on average an American turning 65 … will incur $120,900 in future (long-term services and supports) costs, measured in today’s dollars.” And nearly 40 percent of those costs will be paid out-of-pocket by individuals or, often, by their families.

WA Cares, a one-of-kind state program, charges a payroll fee of 0.58 percent of gross pay, 58 cents for every $100 in your paycheck. In exchange, after 10 years of vesting, those enrolled are eligible for a life-time benefit of $36,500 — in effect, $100 a day for a year — a sum that will be adjusted for inflation over time.

However, WA Cares is now challenged by Initiative 2124 on the Nov. 5 ballot. The initiative would make participation in the program optional, but in doing so, the program — which draws on the participation of most working state residents and then invests those funds for long-term stability — would likely face insolvency in a matter of years, says Cathy MacCaul, advocacy director for AARP Washington, in a recent interview.

“There’s no way forward for solvency if we create this as an opt-out,” said MacCaul, who also serves on the state’s long-term care trust commission, which helps oversee WA Cares, its administration and its investments.

That’s also the conclusion of Milliman, an actuarial adviser. Allowing workers to opt out, a Milliman report from December found, would result in an “insurance rate spiral” where higher-income workers — with more ability to pay for their own care — would leave, leaving more costs with remaining and lower-paid workers, who are less able to provide enough funding to support the program. Rates would have to be increased, Milliman said, forcing more to opt out, driving the spiral.

Milliman, in an earlier report, also found that as designed, between 2022 and 2097, under several economic scenarios, the trust fund’s balance would remain “positive” for at least the next 75 years, without the need for rate increases.

Without WA Cares, MacCaul said, many will be unprepared as the age wave hits. with more baby boomers having turned 60 and older and needing care as they age. And with an average savings of about $5,000, most Americans are not ready for those costs.

“People have not prepared. They have not anticipated their long term care needs,” MacCaul said. “We know that 70 percent of the population is going to need some type of long-term care once they’re over 65. WA Cares provides that support.”

In Washington state, much of that care is provided by about 820,000 unpaid family caregivers who provide that care out of their own pockets, MacCaul said.

“It’s really the family caregivers who jump in,” she said. “They cut back their hours at work. They quit their jobs. They pay out of pocket. On average in Washington state, it’s $7,200 out of pocket that they pay to help provide care to a loved one.”

Criticism of WA Cares, by initiative supporters, including hedge fund manager Brian Heywood and his Let’s Go Washington initiative campaign, has focused on the payroll deduction and the benefit provided, arguing that some may not have a need for the benefit.

MacCaul and others counter that many will need that benefit and see it as worth the investment.

MacCaul said she was talking with an AARP volunteer recently who’s son was doing some “back of the napkin math” to help him decide how to vote and determined that his contributions to WA Cares in a year were similar to what someone, with a pre-existing condition, would have to pay each month for private long-term care insurance.

The program, providing a lifetime benefit of $36,500, isn’t going to cover all of a family’s need for someone who needs care, especially when some care facilities charge $10,000 a month of more, but what it does allow a family or individual is time to consider options for home care and support for those costs for a few months or longer while arrangements are made.

Christina Keys, who works as an advocate for family caregivers, says that what WA Cares is expected to provide would have made a big difference for her own family, after her mother, who was still active and putting in flooring at her home one day, suffered a stroke.

“Her life changed, and my life changed,” Keys said; she was forced to leave her job. That $36,500 from WA Cares, had it been available, would have been a “game changer” for her, she said.

“That covers over 1,000 hours of care. I would have been able to stay at my job longer,” Keys said. “I would have been able to make better decisions for my mom. It would have covered a (wheelchair) ramp that we needed, the remodels that we needed.”

Justin Gill, president of the Washington State Nurses Association — which like AARP Washington urges a no vote on I-2124 — and an urgent care nurse practitioner in Everett, said Keys’ story is not unique and one he sees frequently in his workplace.

Even for those already in home care, the fund could provide simple equipment and services that can provide better care and prevent falls and other health complications.

“It’s that accessibility to funds that I think actually has a lot more value long term,” Gill said. If people don’t have the money for those improvements, it can lead to accidents that drive up the cost of care and force people from their homes, he said.

As with other initiatives this election, voters are offered a false economic choice, a chance to save a little money now at likely greater cost later.

Like Social Security, WA Cares asks Washington residents to stand together, pitch in a modest amount of their wages and assure some additional stability for a growing segment of society — and for themselves, later in life — when they are in need of long-term care supports and services.

For those still unconvinced that what WA Cares provides is sufficient, Gill says consider the alternative.

“If you vote to tear down this system, then you’ll have a lot less than $36,500 available,” Gill said.

Learn more about WA Cares

For more information about WA Cares, how the fund works, the services covered, resources for caregivers and basic information about the program, including a calculator that shows what workers can expect to pay into the system each year and during their working years go to wacaresfund.wa.gov/.