Eleanor Baumgartner: Voters will choose whether to make the long-term care payroll tax optional instead of mandated

By Eleanor Baumgartner

Do Washington state workers want to pay an extra payroll tax for a government-run long-term care program that only some of them will qualify to use?

That’s the question voters will be deciding this November, after Initiative 2124 was put forward by citizen group Let’s Go Washington. The group collected over 400,000 signatures in order to give voters a choice.

Since July 2023, most of Washington’s workers have been paying state government an extra 58 cents on every $100 of their earnings. For someone making $50,000 annually, that’s around $290 a year.

The Washington Cares Fund payroll tax is supposed to help an aging population pay for long-term care needs, but it’s a flawed program that will provide no benefit to many of those who are currently forced to pay into it.

If Initiative 2124 passes, employees would have the right to choose to pay into the WA Cares Fund, and would be able to opt out at any time.

Both Democratic and Republican elected leaders are concerned by the financial risks that Americans face as they grow older. Healthcare and assisted living costs continue to rise rapidly.

Since July 2023, WA Cares taxes have been paid by almost everyone who receives a W2 in Washington state – including low-income and part-time workers. In fact, Washington state workers who live outside the state are included unless they proactively seek an exemption.

During a brief opt-out window provided to people with private long-term-care insurance, nearly half a million exempted workers chose to quit the program – a significant proportion of the workforce.

“The Washington Cares tax increase is a terrible solution to a real problem,” says Senate Republican Leader John Braun (Centralia). “There is no way a new, complicated government program can offer a better insurance product than the competitive private market.”

Elizabeth New, of the Washington Policy Center, has previously described the program as riddled with false promises, with a maze of eligibility complications rooted in the fiscal uncertainty of the program.

To receive benefits, workers must have paid into WA Cares for, typically, 10 years without a break of five or more years and worked a minimum of 500 hours in each of those 10 years. This could reset benefits eligibility for parents who take time off work to care for young children, even though they will have paid into the program.

Those who do qualify are limited to a maximum lifetime benefit of $36,500 that is unlikely to cover all their needs. Moreover, choices for care are restricted to state-approved care options.

Long-term care providers must complete state-approved mandatory training to get program dollars, and it’s likely that Service Employees International Union 775 will be handed a monopoly over that training.

Indeed, House Bill 1087 created Washington Cares and was a top priority of SEIU, which represents 45,000 paid caregivers and could reap a windfall in revenue and membership.

New says a better way to help aging Washingtonians would be for the state to promote education for responsible financial planning for individuals’ long-term care needs. She also believes legislators should pursue reforms to create a healthy, price competitive insurance market and seek to end abuses of Medicaid, which should serve as a safety net for those in need.

Let’s Go Washington primary sponsor Brian Heywood expects SEIU to spend significantly to defeat Initiative 2124. “We’re fighting an opponent with deep financial resources,” he says.

Still, the flaws in the mandated payroll tax make the fight worthwhile, according to Heywood.

“At the end of the day, this is about policy. If this was an independent, private product, Attorney General Bob Ferguson would be suing the providers for insurance fraud.

“If a program is so unpopular that you have to force people to join it, then it’s not a good program.”

Here’s what we know right now: Regardless of what the voters decide, our state continues to face a challenge in the funding of long-term care costs. Furthermore, while individuals need the flexibility to plan according to their own situation and resources, that is unlikely to be achieved by government mandates.

Eleanor Baumgartner, of Spokane, is a volunteer for the Washington Policy Center. Members of the Cowles family, owners of The Spokesman-Review, have previously hosted fundrai.sers for the Washington Policy Center and sit on the organization’s board.