This November, Washington state voters will weigh in on SJR 8212, a ballot measure that has major implications for the solvency of our public long-term care insurance program.
As a representative of employers on the 10-member commission overseeing the implementation of this program, also known as the Long-Term Care Trust Act, and the solvency of its fund, the Seattle Metro Chamber has an interest in making sure that this fund can meet its obligations. That is why we recommend a vote to “Approve” SJR 8212, which would add long-term care funds to the list of funds that our state can invest in the stock market, as it does for public pensions and retirement funds for public employees like teachers and firefighters, industrial insurance funds, and funds for the care of developmentally disabled persons. Investments would be overseen by the trusted and effective Washington State Investment Board.
We are proud to join a broad range of people and organizations supporting this measure, including the AARP, the Washington Health Care Association, labor unions representing frontline health care workers, the League of Women Voters, as well as bi-partisan, near-unanimous support from the legislature with the House and Senate voting to approve 96-1 and 45-3, respectively, including the leading Senators on the Ways and Means Committee, Chair Christine Rolfes (D-23rd) and John Braun (R-20th).
What is the Long Term Care Trust Act?
The Long Term Care Trust Act, approved by legislators last year, establishes a $36,500 lifetime benefit in 2019 dollars for long-term care supports for all eligible Washingtonians. is funded by employee payroll deductions ($0.58/$100 earned). It begins collecting revenue in 2022 and will begin payouts in 2025,
What is at stake for the fund?
The actuarial projections that informed the current tax rate assumed that revenues collected would grow by about 5 percent over the program’s first 75 years. However, today, the fund is subject to to Article XXIX, which prohibits the state from being interested in the stock of any company, association, or corporation. This provision has been interpreted to mean that the state cannot place any investment funds in stock and other equities. This means the state can only invest the revenue it collects in government bonds, which have a substantially lower rate of return, an estimated 2.0%, putting the fund’s solvency at risk.
Passing the measure would allow our state to responsibly invest these funds, just as many people choose to put long-term investments in accounts that benefit from market growth. If this measure fails, legislators have three options: increase the employee-paid premium, add an employer premium, or lower the benefit payout.
Voters have previously approved constitutional amendments to specifically exempt some state funds from these restrictions, including: public pension or retirement funds, industrial insurance trust funds, and funds held in trust for the benefit of persons with developmental disabilities. Investments are still overseen by the Washington State Investment Board.
Why is this a constitutional amendment?
Our state requires a simple majority of voters to approve any changes to our state's constitution. Amendments need to go through the legislature - and this one received broad, bipartisan support. The Washington State Legislature voted 45-3 in the Senate and 96-1 in the House to refer this amendment to the ballot.