Since our report last year on Washington’s now-delayed long-term care program, the Office of the State Actuary has published new information on Medicaid savings and private opt-outs. (I’ll write about the opt-outs in another post).

The long-term care program is technically called the long-term services and supports trust (LTSST) program, but it is commonly known as WA Cares. Under current law, premiums will be collected beginning July 1, 2023, and benefits will be payable beginning July 1, 2026. The program is expected to reduce Medicaid spending in Washington, as some people will get long-term care services from WA Cares before resorting to Medicaid.

In 2018, a Milliman report had estimated that Medicaid savings given a potential LTSST program would total $3.742 billion for the 2022–52 period. On Nov. 5, 2021, Milliman provided a report to the Office of the State Actuary that updates the estimates of Medicaid savings due to WA Cares and extends them through 2096 (the end of the 75-year actuarial window).

The Nov. 2021 report builds on the base plan from the 2020 actuarial study of the LTSST program. That means that the November report doesn’t incorporate the effects of program changes made this legislative session (including the delay) and it doesn’t incorporate the higher-than-expected number of people opting out of the program.

Milliman estimates that state and federal Medicaid spending on long-term care in Washington totaled $2.1 billion in 2019. With WA Cares, Milliman estimates that state and federal Medicaid savings will be $70 million in 2025 and $2.16 billion in 2096. Those savings estimates include the impacts of inflation. Assuming constant 2025 dollars, Milliman estimates that Medicaid savings will be $70 million in 2025 and $370 million in 2096.

One of the stated purposes of WA Cares was to “lessen the burden of medicaid on the state budget.” But at what cost? Total Medicaid savings for the 2025–2096 period are projected to be $60.16 billion (nominal) or $18.68 billion (constant 2025 dollars). Meanwhile, the estimate of WA Cares payroll taxes paid (at the 0.58% rate) for the 2022–2096 period (which Milliman’s 2020 report presented in constant 2022 dollars) is $97.2 billion. The chart compares the payroll taxes paid to the total federal and state Medicaid savings by year (both in constant dollars).

Further, Milliman estimates that the state portion of the Medicaid savings would be about 45% of the total. As we wrote in our 2021 report, it is possible the state could get a federal waiver allowing the state to collect 100% of the savings. If that doesn’t happen, state savings from 2025–2096 would total just $27.072 billion (nominal) or $8.406 billion (constant dollars). But Washington residents would still pay $97.2 billion in premiums.