Lawmakers delay the unpopular long-term-care entitlement program; paid family leave faces similar problems

About the Author
Elizabeth New (Hovde)
Policy Analyst and Director of the Centers for Health Care and Worker Rights

“If you can’t be a good example, then you’ll just have to be a horrible warning.” 

— Quote credited to Catherine Aird

Now that Gov. Jay Inslee has signed a bill delaying the payroll tax for a state-imposed, long-term-care program, lawmakers can find a better way to prepare for the silver tsunami promising to gobble up Medicaid dollars, right?  

Repealing the law, and then cutting premium taxes and regulations that drive up the cost of private insurance would be a good start, as would looking at Medicaid’s shortcomings. Those are the kind of real reforms lawmakers should enact, not fussing around the edges of a poorly written, unpopular and misguided law.  

In the meantime, the Employment Security Department (ESD) has issued instructions for employers on not collecting the payroll tax, and says it will provide additional information in February.   

The long-term-care program is already in solvency trouble before it even begins — even though that was not the main motivation for the 18-month delay.  The credit for that goes to workers who didn’t want the program.  

The numbers for the long-term-care fund don’t crunch well, and the program is restrictive and burdensome, much like the Paid Family and Medical Leave (PFML) program. Both social programs are funded with payroll taxes on workers’ income – adding an unfair burden to a state that already has heavy taxation. 

When the family leave payroll tax started in 2019, 0.4% of workers’ wages went to the program, with 63% paid by employees and 37% paid by employers. Lawmakers increased that rate Jan. 1. Now, 0.6% of workers’ wages go to the paid-leave program, and the employee share has increased to 73%, with the remainder paid by employers.  

A Jan. 18  update on family leave says ESD is concerned about the fund’s solvency, “given recent cash projections which show that a deficit cash position in March or April of 2022 is likely (as the rate increase will not be available until the end of the first quarter).” It also explains, “Gov. Inslee’s Supplemental Budget includes $100k in funding for an actuary to assist ESD with refining its projections and identifying rate options for long-term solvency.”  

The Associated Press reports that half of the applications for family leave were for health reasons, with another 12% of applications for caring for a family member with a health condition. This is not surprising in the time of COVID-19. More than 37% of applications were for the birth of child.  

Reliance on government for our needs and wants is growing and being encouraged by the governor, many legislators and state agencies. Our democracy cannot remain strong if most people become dependent on the state. Let’s hope 18 months gives lawmakers and voters time to consider the wisdom in the policy relating to long-term care.