If voters approve an initiative allowing participation in the state’s WA Cares program to be optional, would it “continue to force” seniors to spend themselves into poverty?

The short and not-simple answer is: No.

Earlier this month, House Speaker Laurie Jinkins, D-Tacoma, said that lawmakers were waiting on a fiscal note for Initiative 2124, the initiative hoping to make the state’s mandatory long-term-care program and payroll tax optional. She said the fiscal note could be “devastating” and “that would continue to force our seniors to spend themselves into poverty.” 

Since that time, Democrats announced they will not hold a hearing on I-2124.

I called Jinkins' office seeking comment on what she meant by her statements, and a few days later I got an email from a Jinkins staff member. It said the speaker said I could look at the fiscal note for Initiative 2124 for more information on the financial impact of the initiative. OK. No comment and "look at the fiscal note." I'll do my best to understand what was meant.

The fiscal note for the initiative is 58 pages long. From my review of the 58 pages of maybe-we’ll see comments and numbers, it looks like it's estimated that it will be costly to manage an even more complicated WA Cares. While some agencies predict no expenditure increases related to the initiative’s passage, the large expenditures predicted relate to potential operating expenses for the program if it changes. Remember, no seniors are receiving money from WA Cares today, no seniors will have money taken away from them if WA Cares becomes optional, and no one could ever count on a WA Cares payout.

I absolutely think it will be more costly to run a slimmed-down WA Cares. Less money will be coming into the fund, even if all the operating costs stay the same. This long-term-care (LTC) law and the program it created were already only maybe solvent according to state-ordered actuarial reports. 

That’s the reason I was urging lawmakers to repeal WA Cares or hold a last-gasp hearing on the initiative and offer a ballot alternative to I-2124 that could get the state out of this long-term mess it created. The state would spend a whole lot less on ongoing operating expenses if it could stop administering all things WA Cares — especially for a smaller pool of people, which agencies closest to WA Cares expect. 

Agencies considered scenarios in which 25 percent to 75 percent of people drop participation in WA Cares, possibly leaving a skeleton crew choosing to stick with the LTC program, some because they already know they are likely to have service needs or because they might have the right number of working years left to think the WA Cares gamble is worth it.

The Office of Administrative Hearings (OAH) wrote that the initiative’s passing could leave it with a surplus between $55,000 and $165,000. That’s because OAH assumes up to 75% of current workers will choose to opt out, resulting in a reduction of appeals it was expected and funded to handle. 

On another hand, the Department of Social and Health Services (DSHS) and the Employment Security Department (ESD) say their agencies would have a lot of new workforce needs to handle the optional enrollment. ESD also wrote that their cost assumptions “do not include the impact of adverse selection of employees with lower income and poorer health status that would be more likely to remain in the program.” 

The Office of the State Actuary wrote in the fiscal note that changing the WA Cares Fund to a fully voluntary program while retaining guaranteed coverage “may have unintended consequences on the fund’s solvency.” It continued, “Those unintended consequences include scenarios where the program may have insufficient assets to pay full program benefits or where premium rates become unaffordable over time. If premium rates become unaffordable, the ongoing voluntary nature of the program and who participates could further lead to increased premium rates that could ultimately lead to an unsustainable program.” (Note that “premium rates” mean the payroll tax of 58 cents on every $100 a worker earns.)

Milliman, the company the state has used to create actuarial studies of WA Cares, backs this concern up, saying that the payroll tax will likely need to be raised “significantly” from current law and, “Voluntary programs without underwriting or other tools available to mitigate adverse selection may lack actuarial soundness (i.e., the program is more likely to become insolvent).” More concern for a voluntary WA Cares was expressed this way by Milliman: “A fully voluntary program with no underwriting at enrollment would likely result in significant adverse selection.” 

The fiscal note is certainly devastating for the state. It was already communicating false promises about WA Cares, saying workers could have “peace of mind” about LTC needs because W2 workers’ wages were being taken for this fund. Workers can’t have peace of mind. Many of them won’t meet the eligibility hurdles attached to the program. 

If the initiative passes, most assume WA Cares will be unsustainable. We can have peace of mind about that. The fiscal note backs up my wish that the Legislature would craft a ballot alternative repealing WA Cares. It could then shift money being spent trying to get people to like WA Cares to instead vote it down in November, as lawmakers should have already done when they were aware of the law’s numerous flaws and glaringly unfair details.

Seniors and poverty?

Now that I’ve reviewed the fiscal note thoroughly, I can get to the false and inflammatory suggestion that the initiative would continue to “force” seniors to spend themselves into poverty.

Some seniors choose to spend themselves into what — on paper — looks like poverty so they can qualify for a Medicaid safety net that already exists for people without resources who need financial help with long-term care. It is not a secret that people use Medicaid to pay for LTC needs, allowing them to keep their savings and investments for heirs and use taxpayer financing for long-term care. 

Stephen Moses, president of the Center for Long-Term Care Reform, writes in a recent article that Americans spent $530 billion on LTC in 2021. A small amount of that — just 12% — was made up of out-of-pocket expenditures or people using their income or savings. Meanwhile, research shows many older adults can finance a substantial amount of paid home care out of pocket with their savings and assets, if required.

While most people don’t consume their life savings paying for long-term care, despite what Washington state’s marketing campaign for WA Cares and some lawmakers suggest, a lot of people do take advantage of Medicaid and let other taxpayers pick up the tab for their long-term care.

It is time for lawmakers to restore reasonable expectations surrounding how individuals pay for long-term care and let people make their own life plans in a broad, price-competitive insurance market. Creating a safety net for people who are not in need, as WA Cares does, is hurtful and cruel when it takes income from workers who are trying to make ends meet. Many workers paying into WA Cares will watch some of their income go to fund the LTC services of people with more resources and who are not in need.

Summing up

In sum, no one is forced to get rid of their financial resources to qualify for Medicaid, but some choose to. For people who are in poverty, Medicaid is a safety net. Because the lifetime benefit attached to WA Cares is an inadequate $36,500, people who need LTC and have few resources could still be seeking Medicaid’s help before or after the lifetime benefit is exhausted. WA Cares might even cause more people not to save or invest in the possible need for long-term care. They might think the tax on their income for WA Cares will do the trick.

State lawmakers should repeal WA Cares or offer a repeal alternative to voters so the state doesn’t have to experience the fiscal impacts of managing a WA Cares with little chance of paying its way. Next session they could work on ways to help strengthen and reform Medicaid to save taxpayer dollars, protect dollars for the needy, and improve the quality of long-term care for all. 
 

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Update March 1: More clarity on Jinkins' statement comes from a column she co-authored that appeared in  The Seattle Times. As I thought, she is talking about what is known as paying down to qualify for Medicaid help with long-term care.

In the column it says, "Initiative 2124 would let workers opt out of WA Cares, chipping away at Washingtonians’ ability to retire with dignity, forcing people to spend down their entire savings or retirement before getting help with long-term care."