Elizabeth Hovde: Questions about solvency plague WA Cares

By Elizabeth Hovde

Is WA Cares, the state’s mandatory long-term-care program, solvent?

Maybe.

Officials at the most recent Long-Term Services and Supports Trust Commission meeting went over a new state-commissioned actuarial report, its solvency predictions and a slew of commission recommendations for the Legislature. The new actuarial report was of particular interest because the last one indicated the program was facing insolvency before it had even begun.

This latest study, by hired consultant Milliman, concluded that the WA Cares Fund could remain solvent at the current tax rate of 0.58% until 2098 – under some scenarios. Under other scenarios, it won’t.

The commission was clearly told that the fund balance is highly sensitive to the underlying modeling assumptions and could vary, even if none of the changes that the commission is recommending to the Legislature is made. And Milliman provided the commission a graph with many gray lines that represented the many ways in which assumptions might change and alter the tax rate needed to keep WA Cares solvent.

Essentially, what this means is the issue of WA Cares’ solvency is a big gray area, not something we can celebrate and be sure of, as headlines from the state declare.

I don’t have peace of mind that the tax rate of 58 cents per $100 earned won’t rise. There are just too many assumptions to be confident of that. A better assumption is one based on what happens to other payroll taxes for other state programs. Their inevitable increases suggest keeping the WA Cares tax at 58 cents per $100 earned is wishful thinking.

Touting solvency could make support for the program easier, but it shouldn’t. There are plenty of other reasons to be against the idea. The WA Cares Fund creates an overly broad safety net for people in need and those with abundant personal resources. Further, even those who do need help with long-term-care services someday, might not qualify for the taxpayer-funded benefit they’re being promised.

In addition to tackling the question of solvency, the commission tried tackling the program’s unpopularity.

Right now, if you move out of the state after paying into WA Cares for years and you need long-term care, you won’t receive the WA Cares benefit. Portability of the benefit is something Washingtonians who will be forced to pay the tax want and something WA Cares is criticized for not having.

The commission was warned that expanding portability would be expensive for the program and that administrative costs would be substantial. All of which suggest portability will be talked about, recommended, explored and ultimately rejected, because the increase to the fund is too great

One cost-saving measure the commission will urge the Legislature to require is the recertification of people who have opted out of the fund because they had a private insurance plan. Lawmakers and insurance sellers both have an interest in making sure people have kept their long-term-care insurance. If they haven’t, the idea is that they could be thrown back into the taxpaying pool. There are questions about that scenario, however, since it would renege on the state’s original direction to those who opted out.

The state has already amended its long-term-care law in the past few legislative sessions and delayed the program and its payroll tax collection. Now it might amend the law further with the commission set to adopt a final recommendations report at its Dec. 9 meeting.

A new round of recommendations will not ultimately fix the law. The real fix is to repeal it. It’s unpopular, its solvency is questionable, the benefit is limited, and it will be inadequate for most people.

Instead of becoming a quasi-insurer, the state should be using its bully pulpit to promote individual planning for LTC. Lawmakers also should seek to limit Medicaid abuse for long-term-care financing. Medicaid is not long-term-care insurance, and it shouldn’t be used as such. Finding ways to increase access to and reduce costs for private long-term-care insurance plans is also something lawmakers could do to address long-term-care needs.

WA Cares tells people to depend on government to deliver their long-term-care needs. That’s a promise we would be unwise to rely on.

Elizabeth Hovde is the director of the Center for Health Care at Washington Policy Center and is based in Vancouver, Washington. Members of the Cowles family, owners of The Spokesman-Review, have previously hosted fundraisers for the Washington Policy Center and sit on the organization’s board.