A New Way to Fund Long-Term Care

funding LTC

Long-term care, essential for healthy aging, is expensive — and only growing costlier. Genworth’s “2018 Cost of Care Report” shows, on average, adult day health care costs $1,500 per month in Colorado, with assisted living care costing almost three times as much. Perhaps unsurprisingly, Genworth also reports long-term care expenses continue to grow faster than inflation.

As costs rise, individuals’ ability to pay for essential long-term care services is simultaneously declining. The growing gap between need and affordability is a concern for thousands of older Coloradans, but also for our General Fund. When individuals can’t afford long-term services, costs are pushed to the state’s Medicaid program. Recent research from the Colorado Health Institute finds if our long-term care system remains unchanged, Colorado will have more than a $450 million yearly gap between long-term care revenue and expenses by 2030.

The flip side to states bearing the growing burden of long-term care costs is we also have latitude to develop new and innovative solutions that address this problem. The state of Washington has embraced this ability, and an innovative proposal to fund long-term care is currently making its way through the state legislature. If passed, Washington’s Long-Term Care Act will create a first of its kind social insurance program and provide the state with an additional long-term care financing mechanism.

Related: Smart Policy Can Make Long-Term Care More Accessible for Older Adults

Washington’s Long-Term Care Act has roots in 2015 legislation which required the state to study two new long-term care financing options: a publicly funded social insurance program; and the creation of a public-private reinsurance program aimed at supporting the long-term care insurance market. Released in 2017, the study shows bolstering the private market wouldn’t increase the affordability or use of long-term care insurance, nor would it decrease state LTSS costs. Buoyed by this analysis and findings the state’s $2.1 billion annual long-term services costs were projected to grow 91 percent by 2040 if unaddressed, a bi-partisan group of legislators introduced the Long-Term Care Act in 2017.

Despite bipartisan and community support, the Long Term Care Act didn’t pass in 2017, largely due to a major stakeholder’s technical concerns. However, these issues were addressed, and a very similar bill was introduced at the start of the 2019 legislative session. In its current form, the bill allows all Washingtonians who vest into the system to access up to $36,500 worth of long-term care throughout his or her lifetime, paid for with a .58 percent tax on employee wages. Funds can be used for a variety of services, including adult day services, in-home care, assisted living care, respite, and home modifications. If passed, the Long-Term Care Act is projected to save the state almost $4 billion by 2052. As of early February, the bill has already passed out of its first committee.

Washington’s Long-Term Care Act is one of many innovative state solutions designed to promote healthy aging. In Colorado, as we strengthen our own long-term care systems, we can learn from efforts like Washington’s. Soon, the Bell will be releasing a nationwide scan of promising policies and practices that support healthy aging and long-term care. Colorado advocates, stakeholders, and policymakers can use this scan, learn from work being done around the country, and create tailored solutions that allow all older Coloradans to thrive.