Delay of the long-term-care program and payroll tax passes Senate committee

By ELIZABETH HOVDE  | 
Jan 25, 2022
BLOG

The Senate Ways & Means Committee has approved Substitute House Bill 1732 to delay a payroll tax for the new state-mandated, long-term-care fund. It will now make its way to a full Senate vote and to Gov. Jay Inslee for signing, having passed the House last week.

All that’s expected to happen soon, making good on Inslee’s vow in December to get lawmakers to stall the misguided law that he supports but acknowledges needs “fixes.” Payroll taxes for the program created by the law — called the WA Cares Fund — would start being taken out of workers’ paychecks in July of 2023 instead of this month. That’s after the next round of elections, and it might be after workers have quieted down a bit about how bad this long-term-care law is for them. 

Unfortunately, the law will still be bad in 18 months. A few of the glaringly unfair provisions might be changed, but workers will still be required to fund a social program they might not want or need and that takes money, in some cases, from low-income wage earners to finance the long-term-care needs of people with more wealth. 

The only silver lining in the coming delay of this regressive tax is that employers would have more direction about what to do with employee paychecks this month. The governor confused the issue in December.  

As I said in testimony before the Senate committee Monday, repeal is the only real fix. Read more about Monday’s public hearing and my testimony in The Center Square

One senator rightly pointed out that the private market was often a better bet for people’s long-term-care needs, and another pointed out that a lot of workers will not be helped by the fund at all. Other people pointed out that the lifetime benefit was entirely insufficient. They are all right. The state-imposed program is offering Washingtonians false security while lowering wages that could be used to help offer real security. 

Repeal is the right way to go, but bills and amendments to accomplish that are being ignored. The long-term-care law is still poorly written, excluding many Washingtonians intentionally, and we have no idea yet how well the fund will be executed. It’s insolvent over the long haul, and creating more exemption categories (“fixes”) makes things worse for the fund, promising the payroll tax will likely need to increase or the benefit decrease. Nearly half a million people have already opted out of the WA Cares Fund. The state expected only 105,000 to walk out on the program. 

The law passed in 2019 along party lines, shifting more Medicaid costs onto workers. And the Medicaid budget is the beneficiary of the long-term-care fund. Washington workers are not. Even if a person does end up navigating the many hurdles created to keep workers from cashing in on the program's lifetime benefit of up to $36,500, that amount is not enough to accommodate most people’s long-term-care needs. 

Repeal bills are being ignored this session in favor of rearranging deck chairs.

 

Update: This blog was updated to name the Senate committee that approved the bills on Jan. 25.

Sign up for the WPC Newsletter