Few Americans can afford long-term care - but this state program could be a game changer

By Ezekiel J. Emanuel & Benjamin W. Veghte

Washington state is implementing a first-in-the-nation program that gives workers a way to earn up to $36,500 in long-term care. Is a federal program next?

In Washington state, workers are paying into a long-term-care benefit. Is this a model for the U.S.?

Here's the good news: After declining for years due to "deaths of despair" and COVID-19, life expectancy in the U.S. has risen to 79 years, its highest level ever.

But now the bad news: As they age, millions of Americans will be exposed to risks that are serious, expensive and not covered by Medicare. More than 11,000 Americans are now turning 65 every day, and seven out of 10 will end up needing long-term care, which includes help with things like eating, bathing, using the toilet and managing medications. By 2040, the number of Americans age 85 and older will double.

And then there's the really bad news: The vast majority of older Americans - and their children - have no way of paying for the help they are likely to need.

But there is a ray of hope. Washington state has embarked on a bold experiment that bolsters families by giving all workers a way to earn access to $36,500 worth of long-term care when they need it. And this initiative is likely to be a model for the country.

If the U.S. healthcare system is dysfunctional, then the long-term-care situation is a complete and utter disaster. Many aging Americans think Medicare will provide them with long-term care. They are seriously misinformed. Medicare does not pay for long-term care. It only covers medical and limited rehabilitation costs.

Medicaid does cover long-term care, but only for people who are poor or very close to it. In most states, an older adult must have very limited savings - often less than $2,000 - and less than about $3,000 per month in income to qualify for a nursing home or in-home care funded by Medicaid.

Private long-term-care insurance is unaffordable for most Americans. For example, a 55-year-old woman purchasing $165,000 worth of long-term-care insurance (with inflation protection) would pay about $3,750 per year. This is too much for middle-class Americans trying to juggle childcare, college tuition, and rising costs for food, fuel and housing. Consequently, only 4% or fewer Americans age 50 or older have long-term-care insurance, and they are the most affluent.

With only the very poor or very rich having any way of paying for long-term care, that leaves the families of the broad middle class struggling financially and emotionally to keep mom and dad safe. This is untenable. Until now, the refrain from policymakers has been that the U.S. cannot afford universal long-term care, even though countries like Denmark, Germany, Japan, the Netherlands and South Korea, which are all less affluent than the U.S., have long been able to do so.

Washington state's big bet

Washington state decided to tackle this problem. In 2019, it set up the WA Cares Fund, a universal public-insurance program that gives all workers in the state a way to earn affordable long-term-care coverage. This program is a mandatory social-insurance model - like Medicare, but at the state level. The benefit is earned by working, earning income and contributing to the fund. Starting in 2023, workers began contributing 0.58% from each paycheck, and over time they can qualify for up to $36,500 in long-term care benefits. If workers want more coverage, they will be able to buy supplemental insurance on the private market. Benefits become available statewide for the first time in July.

Most people will use their benefits to age in place, for example by paying a family caregiver or home-health worker. The benefits can also be used to help offset the cost of assisted living or a nursing home. For people who plan to use their benefits for residential care, supplemental private insurance will be key. Over the long term, the program should generate savings for Medicaid by reducing reliance on its long-term-care services, and for Medicare by keeping more seniors safe at home and reducing emergency-room visits.

Importantly, actuaries have assessed that because everyone contributes and there is a cap on lifetime benefits, the long-term-care fund is financially sound for the next 75 years. This is absolutely critical, because it gives young adults peace of mind that their own benefits will be there for them in the decades to come. For 30-somethings who are struggling to afford childcare and save adequately for retirement, WA Cares offers twofold support. It alleviates some of the burden of caring for their aging parents, and it ensures that some level of care will be available as they themselves age.

Washington state enacted WA Cares to protect middle-class families from the risks that come with loved ones needing long-term care. The state's political leaders saw the writing on the wall: With the demographic shift, the ratio of family caregivers to aging parents was set to decline from 7:1 in 2010 to 3:1 in 2050. At the same time, the generations following the baby boomers have struggled to save adequately for retirement. Tomorrow's seniors will not be able to afford to pay out of pocket for in-home care. And the economy will suffer if workers in their 40s and 50s have to quit their jobs to care for mom or dad.

The original statute had two design flaws. The first was that workers had to contribute for 10 years to earn permanent access to benefits, which would have left people who were close to retirement having to contribute but getting nothing in return. The state legislature fixed this problem by adding a pathway for near-retirees. Now, workers born before 1968 can earn 10% of the full benefit for each year they contribute.

A second flaw was that workers who contributed and then left the state to work or retire elsewhere would have been ineligible for benefits. The state fixed this in 2024. Now, workers who leave the state to work or retire elsewhere can choose to continue participating in the program and claim benefits nationwide - and potentially internationally.

In 2024, a ballot initiative was introduced to make WA Cares voluntary. As every expert knows, voluntary health programs are killed by an adverse-selection death spiral.

Healthy high earners would have been able to opt out, leaving only sicker, lower-income people in the program, driving the amount of needed funds up and up and forcing more and more younger healthy people to voluntarily quit. The finances of a voluntary health program don't work. Fortunately, a majority of Washington voters chose to keep the program mandatory.

The political resilience of the WA Cares Fund suggests that Americans desperately want a long-term-care program. Indeed, in a national survey, 68% of people answered this statement in the affirmative: "To help Americans prepare for the costs of ... long-term care, would you favor ... a government-administered long-term care insurance program, similar to Medicare?" Only 10% opposed such a program.

Is the Washington state plan perfect? No. For some seniors, the $36,500 benefit will cover only part of their needs. This is particularly true for women, who tend to need care for longer than men, and for people with disabilities, who need much more care. But the model itself is scalable. This is a start, and an important proof of concept. Much as "Romneycare" gave rise to the Affordable Care Act, WA Cares could finally catalyze a mandatory, universal long-term-care program at the federal level.

Ezekiel J. Emanuel is an oncologist, bioethicist and health-policy expert. He is also the vice provost for global initiatives at the University of Pennsylvania and the author or editor of 16 books, most recently "Eat Your Ice Cream: Six Simple Rules for a Long and Healthy Life."

Benjamin W. Veghte directs the WA Cares Fund, Washington's long-term-care social-insurance program, and is writing here in a personal capacity. He holds a Ph.D. from the University of Chicago and an MPA from the Harvard Kennedy School, and serves on the board of the American Society on Aging.

-Ezekiel J. Emanuel & Benjamin W. Veghte

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-16-26 1247ET