John Braun: Approve I-2124 to get a pay raise while ending the government’s monopoly on long-term care coverage
Friday, October 4, 2024
All four of the citizen initiatives on the upcoming general election ballot would let people keep more of their own money. That alone is a good reason to support each.
Initiative 2124 stands out among those measures, as it literally offers a fast track to a larger paycheck.
The passage of I-2124 would give many Washington workers the choice to increase their take-home pay by opting out of what is now a mandatory payroll tax.
That tax funds a state-run long-term care insurance program — known as “WA Cares” — which is still a long way away from paying for anyone's care.
The payroll tax totals $290 a year for a worker earning $50,000 annually. In the legislative district I serve, the average hourly wage adds up to a yearly income between $65,500 and $82,800, depending on the county. That translates to $380 to $480 a year in lost wages.
It's worst of all in King County, where wages are highest and the tax now shrinks the average hourly paycheck by around $775 annually.
In exchange for seeing their take-home pay shrunk by hundreds of dollars each year, workers are eventually supposed to receive access to a long-term care benefit that currently has a lifetime limit of $36,500.
That wouldn't last long today given the cost of care in an assisted living facility. Just think of what the cost could be in 20 or 30 years.
Payouts also would be subject to certain conditions, and would not begin for anyone until mid-2026 as it is. That's why opponents of I-2124 are not being truthful when they claim the initiative “takes away” benefits.
One of the other major flaws in the long-term care scheme, as originally adopted, was its lack of “portability.” Someone who paid in but then moved out of Washington stood to automatically lose access to any benefits, including workers who spent their careers here but retired to other states.
The portability issue was addressed during this year's legislative session, but only after I-2124 was certified. It was too little, too late to keep more than 424,000 Washington voters from signing the petitions that moved the initiative forward, and it's still not enough to make up for the other shortcomings in the program.
The state voters guide doesn't explain how such a misguided and poorly designed program managed to get through the state Legislature in the first place, but that story is also a reason to support I-2124.
The labor union that calls itself the “caregivers' union” basically wanted the insurance program as a long-term form of job security for its members, and the Democratic majorities in the House and Senate were happy to accommodate one of their political patrons.
When the bill reached the floor of the Senate chamber, Republicans and two moderate Democrats proposed more than 30 amendments. Most weren't adopted, including one that would have put the tax in front of the people as a voter referendum.
Fortunately, Senate Republicans corralled enough support for an amendment that would let workers exempt themselves from the tax by proving they already owned long-term care coverage.
That change held as the bill became law, and would eventually allow more than 500,000 workers to choose their own coverage rather than the one-size-fits-all plan from the state.
But when the exemption window was closed as of November 2021, the market in our state for private long-term care coverage dried up too.
The collection of the payroll tax began in mid-2023. Instead of the $952 million anticipated in the first year, it was recently disclosed that the total taken from workers' checks to support WA Cares was closer to $1.3 billion.
No one should view this unexpectedly large tax collection as resolving the concerns that have been repeatedly raised about the program's solvency. Nor can any of the supporters guarantee the payroll-tax rate will remain where it is.
Passing I-2124 would end the state's stranglehold on long-term care coverage and basically force it to compete with private insurance carriers.
People entering the workforce in our state would no longer be automatically forced to pay into WA Cares, and workers already paying could opt out at any time.
Not surprisingly, the labor union that pushed so hard for what became WA Cares is among the top contributors to the campaign against I-2124.
Labor unions are supposed to advocate for their members, and the influence exerted by this particular union is why the payroll tax exists. But let's follow the money.
Suppose someone who becomes eligible for a WA Cares payout in future years employs a caregiver who belongs to the union and therefore pays union dues. In that sense the long-term care tax ends up providing revenue, in a roundabout way, for the union that lobbied for the tax in the first place.
The passage of I-2124 would threaten that new source of money. It's one more thing for voters to keep in mind as they decide whether to make the payroll tax optional.
When the payroll tax went before Washington voters, as one of the non-binding advisory votes authorized many years ago by the passage of I-960, it received a 63% “no” vote.
That was before we learned the tax would pull more than a billion dollars from Washington workers in just one year. Now WA Cares looks like an even worse deal, in terms of cost versus benefit.
If people in our state want to buy long-term care coverage, great. They should be free to shop for the coverage that best fits their needs and financial situation, instead of being forced to pay for the one government product available, at the government's price.
The state has its hands full enough already with its monopolies on industrial insurance and unemployment insurance. It never should have barged into the long-term care insurance business.
Legislators' time would be better spent looking at ways to make our state more attractive to long-term insurance carriers, so people have more choices. The passage of I-2124 would help kickstart that discussion.
The general-election voting period begins later this month, on Oct. 18. Don't wait to get your ballot turned in – and to pay less, vote “yes” on each of the initiatives.
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Sen. John Braun of Centralia serves the 20th Legislative District, which spans parts of four counties from Yelm to Vancouver. He became Senate Republican leader in 2020.