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Takeaways from Wednesday’s Long-Term Services and Supports Trust Commission meeting, the group that oversees all-things WA Cares, follow:
There wasn’t gloating that Initiative 2124, the Washington state ballot measure that would have made WA Cares optional, failed. There was only a statement that the initiative didn’t pass and that everything is on track with WA Cares.
That includes a new Milliman actuarial report about fund solvency. “Actuarial,” by the way, is fancy talk for compiling and analyzing statistics to calculate insurance risks and premiums. I don’t think of WA Cares as insurance, since one is forced to contribute and cannot fully expect to see a benefit, even if he or she needs long-term care one day. (If it is insurance, it’s bad insurance.) But the state is calling it insurance, and actuarial reports are used to predict fund solvency. If solvency looks questionable at any point, legislators can and would need to lower the lifetime benefit, raise the tax rate of 0.58% or change eligibility requirements. Commission members and lawmakers have already talked about the possibility of needing to do those things in coming years.
Milliman is the actuarial and consulting company that has been punching in all the numbers for predicted revenue, future claims and program use, cost-of-care estimates, ongoing administration, mortality, births, migration, wages, employment, investment revenue and, and, and, … for years. Prior reports’ summaries of key findings have sounded similar to this one, which reads, “Our analysis produces a range of positive and negative actuarial balances ….” Milliman adds that the actuarial balance and other program metrics are highly sensitive to the underlying modeling assumptions and the “fund ratio is estimated to exceed 100% for the next 75 years under most scenarios ….”
Commissioners are reminded to keep watching the data collection in this learning phase of WA Cares, to be cautious with the early experience, and to be aware that if program parameters or key numbers change, predictions of solvency change.
That said, the presentation from actuarialists suggested program solvency is more likely than not — if everything goes as planned. I have read the report, and that is how it appears. Given all the unknowns, however, Milliman is right to encourage caution.
WA Cares Director Ben Veghte believes the fund is on “solid financial footing.” A presenter at the meeting also reiterated that lawmakers can make changes to the tax rate or fund benefit if the program looks to be in trouble.
The report is seen as good news by supporters of WA Cares. Bittersweet news for some Washingtonians is that the state has collected more than expected in the first year of tax collection. Tax revenue for the program and investment returns have grown the fund to over $1.3 billion.
That fund balance has meant less money on workers’ paychecks for the past year and a half (thus the bitter). The fat, first-year kitty, however, does help with future fund solvency for people stuck in a mandatory long-term care program that promises only a maybe benefit and that will have some workers, including low-income ones, financing LTC for people with higher incomes, more resources and no need for taxpayer dependency.
Another highlight from the meeting: One lawmaker, Sen. Steve Conway, D-Tacoma, mentioned interest in seeing how a survivor benefit would impact fund solvency. This sounded like it would be a point of exploration. It definitely is something workers paying into WA Cares would like, but I doubt such a benefit would be seen as wise when so many unknowns already threaten the fund.
At the end of the three-hour meeting, public comments were welcomed. I offered the following, urging fairer details than the WA Cares Fund has now:
“Thanks for your time today. Since Washington voters decided it is OK to tax workers, including low-income ones, for a program that might not offer them a benefit and that will sometimes go to people with higher incomes and more resources, I hope you consider recommending a few things to lawmakers that could make this program a little more fair to some workers.
Take away the “without a five-year break” language from WA Cares eligibility for having to pay in for at least 10 years to benefit. That would help caregivers, parents and gig workers who take breaks from the formal workforce.
Consider survivorship benefits.
Allow people who move into the state with private long-term-care insurance (LTCI) before their move to Washington to be exempt from WA Cares.
Have the benefit adjust “with” inflation, not “up to” inflation.
Make WA Cares pay for itself, and do not allow it to rely on general-fund dollars for fund solvency, showing respect for people who have been paying for their own policies for years.
“Also, if the goal is to help all Washington residents with long-term care and save the state money, keeping people from applying for the safety net that already exists in Medicaid, I think it’s worth exploring allowing people out of the WA Cares program if they purchase a private plan with better security and coverage than WA Cares offers. This should be done with LTCI leaders. Finally, reforming Medicaid is needed.”
WA Cares is continuing. Lawmakers need to make it more palatable.