Opinion: Initiative 2124 would allow workers to keep more of their earnings, could eliminate costly program

Elizabeth New (Hovde) of the Washington Policy Center shares why personal responsibility, market innovations and strong safety nets are the way out of the coming long-term-care crisis our graying population faces

Elizabeth New (Hovde) Washington Policy Center

WA Cares’ supporters are trying to scare people into voting “no” on the initiative that would make WA Cares optional instead of mandatory. They are pushing the message that making WA Cares optional will cost taxpayers millions. One can more easily argue that an optional or dissolved WA Cares will save taxpayers money.

Should I-2124 pass, workers who take advantage of the opportunity to opt out of WA Cares will save hundreds to thousands a year right away. A person making Washington state’s average annual wage would save at least $487 each year not having a WA Cares payroll tax. That’s not an insignificant amount, especially for a benefit that will go to some workers and not others. Various eligibility hurdles will decide WA Cares’ winners and losers, not need.

Even workers who don’t opt out of the program could save money with the passage of this initiative. That’s because lawmakers would be crazy to keep an even weaker, optional WA Cares, given the program’s inability to pay its way.

Since the Legislature dismissed the initiative that will now be decided by voters in November, lawmakers have been listening to presentations about how WA Cares will be left in a monetary death spiral without workers’ mandatory participation. If WA Cares is repealed in response to I-2124 passage, as would be prudent, all workers would save on the administrative costs attached to the program, in addition to whatever amount of payroll tax they pay individually.

WA Cares already faces solvency concerns with a mandatory tax on workers of 58 cents for every $100 of earnings. That’s why there has been talk of raising the payroll tax rate or the required eligibility hours or lowering the inadequate lifetime benefit attached to WA Cares. That amount is $36,500 — an amount that is too small to cover the costs of long-term care and that might not fully rise with inflation.

Fiscal statements, administrative costs

The “no” campaign’s message is fueled in part by a fiscal statement prepared by the Office of Financial Management. The statement outlines increased administrative costs and lower revenue for WA Cares should I-2124 pass. Estimated expenses for the first three fiscal years are in the range of $12,623,250 to $31,215,960.

I don’t doubt that I-2124’s passage would have state agencies asking for even more in administrative costs to navigate changes to the program, but voters should know WA Cares already costs a lot to administer.

Expenses for WA Cares in the 2021-2023 biennium were $42,845,485, and a November report shows the budget appropriation for 2023-2025 is $78,039,772. That amount does not include any supplemental requests made during fiscal year 2024, nor does it include expenses related to payouts from the program. Those don’t begin for a few more years.

Administering WA Cares costs taxpayers millions, and the program will continue to rack up bills for Washingtonians whether it is an optional or mandatory program. I-2124 allowing people to opt out also means benefits will not have to be paid out to that group and should result in fewer appeals and customer service needs. Savings and costs are indeterminate at this time, the fiscal statement acknowledges.

Passage of the initiative should encourage lawmakers to repeal the law that created WA Cares, motivating them to get busy implementing real solutions that save taxpayers money and help people plan for the possible life need of long-term care. WA Cares is not a real solution, despite the false hope WA Cares’ supporters and state agencies have spread.

Enough people now know that the law passed in 2019 was intended to save state budget writers money and create a jobs program that benefits a large union. This law was never meant to ensure that all Washington workers get help with long-term care should they need it. The truth is, many workers are being forced to fund a program they won’t benefit from. In many cases, their wages will go to people with higher incomes, more resources and no need for taxpayer help. Mum’s the word from WA Cares’ supporters on that damning detail.

Medicaid reform needed

The safety net for people in need of financial help with long-term care is Medicaid, not WA Cares. Lawmakers should protect it from abuse by people who have resources to use for long-term care but who instead stick other taxpayers with their bills. Lawmakers can continue to create awareness about the possibility of needing long-term care, too, encouraging personal responsibility and creating a price-competitive insurance market free of government cost-increasers. Lawmakers should not be burdening workers who are trying to make today’s ends meet with more long-term-care cost-shifting.

Personal responsibility, market innovations and strong safety nets are the way out of the coming long-term-care crisis our graying population faces. Passage of I-2124 might bring us closer to real solutions. A weaker and then abandoned WA Cares can save Washingtonians money.

Voters should demand the repeal of the state’s long-term-care law if I-2124 succeeds. They shouldn’t have to pay even more in administrative costs.

Elizabeth New (Hovde) is a policy analyst and the director of the Centers for Health Care and Worker Rights at the Washington Policy Center. She is a Clark County resident.