FILE – Washington care home

Flowers left next to the sign that marks the entrance to the parking lot of the Life Care Center in Kirkland, Washington are shown Monday, March 9, 2020, near Seattle. The nursing home is at the center of the outbreak of the COVID-19 coronavirus in Washington state. 

(The Center Square) – The cost of caring for aging Washingtonians is set to soar in another decade and Washington lawmakers are looking to the stock market to raise more cash.

In 2019, Washington lawmakers passed the Long-Term Care Trust Act, creating the first state-run long-term care insurance program funded by a 0.58% payroll tax.

The program is overseen by the 15-member Washington State Investment Board established in 1981 that includes two lawmakers each from both the state Senate and House.

The law will pay benefits of up to $36,500 for those needing help with such daily activities such as eating, bathing or taking medications.

Only Washington residents ages 18 or older who have paid the payroll tax for 10 years without interruption of five consecutive years, three of the last six years, or work 500 hours per year or more are eligible.

Washington will not collect the tax until January 2022 or pay out benefits until 2025, but lawmakers are worrying about ensuring state coffers will be able to account for soaring long-term care costs.

The Washington Constitution bans the state from investing the stock of any company, association or corporation. Interpretations of this constitutional provision have led to the state limiting its investments to fixed-income securities like government bonds and certificates of deposit rather than stocks and equities.

Some state funds such as public pensions, retirements funds, and industrial insurance trust funds have been exempted from that rule in past decades.

Last year's Senate Joint Resolution 8212 sought to amend the state Constitution, allowing Washington to invest long-term care funds into the stock market much like other public money.

The resolution, which passed by an overwhelming majority in the legislature, had the backing of Washington Sen. Mark Mullet, D-Issaquah, and then-Washington Senate Minority Leader Mark Schoesler, R-Ritzville. 

In November, the resolution failed by 331,729 votes despite support from AARP Washington, the Alzheimer's Association, and League of Women Voters.

Washington Sen. Karen Keiser, D-Des Moines, is still looking to resurrect SJR 8212 as Senate Joint Resolution 8200

Keiser, who sits on the legislature's Health and Long-Term Care Committee, said voters may come around to the resolution if given a chance to understand what is at stake.

"I think the anxiety brought by the pandemic and the recession got to people," Keiser said. "I think it has a much better chance if we have a better informed public."

Since 1980, the senior population has doubled in Washington to more than one million people and will more than double again by 2040.

Someone turning age 65 has nearly a 70% chance of needing some kind of long-term care in their lifetime, according to U.S. Health and Human Services. The average length of time people need long term-care services is three years, the agency reports.

Long-term services and support make up about 6% of Washington's current operating budget and demand for these services will double by 2030 to over 12%. By 2030, the state expects to be burdened with an additional $6 billion in increased near-general fund costs.

In Washington, the average cost for Medicaid in-home care is $24,000 per year and the average cost for nursing home care is $65,000 per year. With private insurance, the average annual cost of a private room at a long-term Washington care facility cost up to $131,000 in 2020, according to GenWorth Financial.

SJR 8212 originally also saw bipartisan opposition from Washington Senators Bob Hasegawa, D-Seattle, and Mike Padden, R-Spokane Valley.

In a joint ballot statement, the two pointed to past recessions and the ongoing pandemic as proof the stock market is no place for taxpayer money. 

"The longterm economic impacts of COVID-19 are still unknown," the two wrote. "Your vote is about prudent fiscal management of our tax dollars. A better idea is to invest public money into federal, state and municipal bonds that support public works we all depend on in Washington. They’re safe." 

The Great Recession of 2008 saw the markets crash by 49% in 16 months. By comparison, the Dow Jones Industrial Average lost 28% of its value following pandemic-induced shutdowns between Feb. 11 and March 12, 2020.

The stock index still reached a record high of 30,199 points in December 2020 after bottoming out at 18,591.

"It's really strange to me that the equities market has been so incredibly strong during this huge pandemic," Keiser said. "But our returns to the state investment board have been quite robust, amazingly so."

Along with long-term care accounts, the Washington State Investment Board manages 37 funds worth $147.4 billion, which include 17 retirement plans.

In June 2019, the board returned 8.36% for its 12-month fiscal year, beating its own expected rate of return by more than 80 basis points.

Keiser expressed confidence that the U.S. equities will still be strong for a long time to come.

Statistics on American stock and bond returns vary by source, but most studies paint the picture that stocks outperform bonds in the long run.

One of the most commonly cited data sets on U.S. stock and bond returns comes from Aswath Damodaran of New York University's Stern School of Business. Stocks, Damodaran found, saw an average return of 9.7% between 1928 and 2019. Bonds saw a return of 4.8% over the same century-long period.

The pandemic wreaked huge costs on the state's long-term care system in 2020.

Long-term care facilities in the state saw 13,870 reported COVID-19 cases and 1,765 deaths from the virus in 2020, the Washington Department of Health reports. Those numbers make up 6% of the state’s total caseload and 51% of the state's death toll in 2020. 

Washington has spent $426.4 million of its $2.95 billion in federal funds on long-term care facilities to pay for emergency staff and beds to isolate residents.

Keiser said the price of waiting could be great if the state's long-term care fund does not see solid gains one way or another.

"If we don't get at least a decent return on investment, and by that we're talking about 2% to 3%, we will have an actuarial deficit and unfunded liability, as they call it," Keiser said. "And that is not acceptable."

Washington lawmakers have about four more months to pass bills before the state legislature adjourns on April 25.