Washington State: First Out of the Gate on LTC Financing
With estimates that more than half of the people in the US who turn 65 will need some paid help for long-term services and supports (LTSS), long-term care financing reform has been a goal of advocates and stakeholders for more than a generation. Medicare doesn’t cover these services for people with chronic functional impairments; Medicaid, through a state-federal partnership is the Nation’s largest public program that pays for LTSS, but only for those with low incomes. “People will no longer have to spend themselves into poverty in order to get care,” said State Representative Laurie Jinkins, the prime sponsor of the bill.
Starting in 2022, all people who work in Washington will pay .58% of their income (through payroll deduction) into the trust fund. After they’ve paid for 10 years (three if they experience a catastrophic disabling event), and they meet the disability eligibility standard, they will be able to tap funds in $100 increments, up to a lifetime cap of $36,500 for help with daily activities. The list of allowable expenditures is broad and includes goods and equipment, home modifications (e.g., a ramp or accessible shower), transportation, food delivery, training for caregivers, and direct services. Respite care to give caregivers a break is covered too.
The payroll premium will collect about $1 billion a year and begin paying benefits in 2025. The total lifetime benefit amount is not enough to pay for full time care, but has been projected to help people avoid or delay turning to Medicaid. It is expected to cover periodic or episodic care. Those who need more supports over a long period of time are still expected to rely on family, out of pocket spending, long-term care insurance (for the small percentage of people who have it), and Medicaid, after they have spent down. Actuaries with Milliman Associates estimate that the Washington Medicaid program will save $34 million in 2025 and a total of nearly $4 billion by 2052.
This new program is not perfect. Benefits are not high enough to pay for full time residential or home care. It involves mandatory payroll deductions, which even at just over half a percent, required extensive discussion during the legislative process. It only covers those who pay into the fund and are in Washington when they need benefits. However, Washington is the first state to successfully pass a LTC financing program. California, Michigan, and Illinois are working on LTC measures; a proposal in Maine was rejected by voters last year.
After the repeal of the CLASS Act, there have been few attempts at reform at the national level. Current Medicare for All proposals include some LTC provisions but they are neither specified in detail nor have financing strategies been spelled out. Last year Representative Frank Pallone (D-NJ) circulated a more detailed draft proposal but details have not yet been finalized and again, financing was not addressed. The Washington LTC Trust Act is an important development because many of the details have been worked out and the proposal was enacted and signed into law.
Advocates for a comprehensive federal solution to meet the needs of our aging population should watch carefully as state proposals take shape and become a reality. If a federal solution continues to elude policy makers in Washington, DC, more states are likely to pursue this path. An important lesson from the Washington State experience to date is that short of a full universal federal entitlement, states will take matters into their own hands and move ahead. Coalitions will work at the state level for solutions. The Washington Long-Term Care Trust Act may turn out to be the most important development yet in the LTC financing debate. It is a true victory for those concerned with Medicaid solvency and with addressing this important – and as yet not well addressed – element of comprehensive health coverage.