State can save with long-term care insurance

Thurston County, and the state of Washington as a whole, is getting older. The Baby Boom generation once represented the freedom of youth. But now, as this huge population cohort moves into retirement age, they represent something very different for the state: a fiscal nightmare.

Nationally, there are 75 million Baby Boomers, and they began reaching the age of 65 in 2011. Across the country, over the next 20 years 10,000 Boomers a day will reach retirement age.

Thurston County is not immune to these trends. In 2000, less than 12 percent of residents were 65 or older. By 2030, state forecasts show that more than 20 percent of Thurston County’s population — nearly 70,000 people — will be over 65. Those are the people who are most likely to need costly long-term care services.

Our state budget is on the verge of being swamped by rapidly rising Medicaid costs, as tens of thousands of seniors reach the point where they need care and assistance to live. If we don’t take action now to reduce those costs, our ability to address other critically important public priorities — like fully funding public education or maintaining our aging transportation network — will be put into jeopardy.

That action should include passing the bipartisan Long-Term Care Trust Act in the current legislative session. By implementing a long-term care insurance system, financed by a 0.49 percent worker contribution from all Washington State workers (amounting to less than $25 a month for the average Washingtonian), the LTC Trust Act will save our state hundreds of millions of dollars over the next two decades.

The core problem is that 70 percent of seniors will need some form of long-term care as they age, yet more than 90 percent are uninsured for such services. Those services aren’t covered by Medicare, and they aren’t cheap, costing between $50,000 and $100,000 per year on average.

A new actuarial report commissioned by the state details the potential fiscal impact. If we don’t act now, Medicaid long-term care spending will rise by more than 140 percent by 2030, consuming more than 10 percent of our state’s biennial budget.

But by creating a worker-financed long-term care benefit now we can eliminate or delay the need for seniors to access publicly-funded Medicaid dollars. The system envisioned by the LTC Trust Act would collect revenues from current workers into a trust account overseen by a public-private commission. As those workers age, they would qualify for the benefit, which would cover one year of long-term care for seniors in the setting that they choose, a nursing home, an adult family home, or, as many aging seniors and their families would prefer, in their own homes.

This sort of program would hugely benefit thousands of Thurston County residents — we are projected to add nearly 25,000 additional seniors in just the next 13 years — who don’t have another way to pay for long-term care. Currently, they are forced to spend down their life savings to reach poverty levels before Medicaid steps in to cover the care that they need. It would benefit their families too, by reducing the burden they face in caring for an aging loved one and by providing them with assurance that some basic care will be available to their family member when it is needed.

Advocacy organizations that represent seniors in our state — AARP, the Alzheimer’s Association, the Washington Health Care Association, to name a few — understand that the current system is unsustainable, and support reforms along these lines. They know we need to implement a system of long-term care coverage like the one this legislation proposes sooner rather than later.

Among legislators, much attention is currently focused on how the state can find the billions of dollars needed to meet our constitutional obligation to amply fund education for our children.

The harsh reality is, however, that whatever funding solution they come up with will inevitably run up against the need to also fund the care our seniors need and deserve. That’s why passing the LTC Trust Act is not just the right thing to do, it’s the fiscally prudent thing to do as well.

This story was originally published March 21, 2017 at 7:53 PM with the headline "State can save with long-term care insurance."