Representative Suozzi Introduces the WISH Act
Representative Thomas Suozzi (D-NY) recently introduced the WISH Act, which aims to provide catastrophic long-term care insurance for older Americans to age at home.
The Well-Being Insurance for Seniors to be at Home, or WISH Act (H.R. 4289), would target benefits to those with disabilities and would be paid for by an additional 0.6 percent payroll tax split equally between employees and employers.
Long-term care benefits would be available for applicants who have reached the retirement age, have paid the tax for at least six quarters, are unable to perform at least two activities of daily living or have severe cognitive impairment, are expected to have a disability for at least one year or until death, and have completed a waiting period after the onset of the disability.
The waiting period would be based on income: beneficiaries with income in the bottom 40th percentile would receive benefits after one year. Then, for every 1.25 percentile increase in lifetime income, the waiting period would increase by one month (for example, an individual in the 50th percentile would have to wait one year and eight months for benefits, while an individual in the 100th percentile would have to wait five years). This ensures benefits flow most quickly to those most in need, while keeping the program actuarially sound.
The long-term care benefit would be a cash amount equal to the median cost of six hours per-day of paid personal assistance, or $3,600 month.
The current market for long-term care insurance is broken. With limited take-up, high prices, and a Medicaid program that often acts as a backstop, many are forced to spend down their assets to qualify for long-term care.
A universal catastrophic program, funded by a payroll tax, could bring some order to the long-term care insurance market. Such insurance could become a cheaper and more attractive alternative to current long-term care coverage. To help promote that possibility, the bill calls on the Secretary of Health and Human Services, in consultation with the Commissioner of Social Security, to develop a plan to educate the public about the costs and availability of long-term care insurance.
More widespread take-up of long-term care insurance could reduce the burden of long-term care on families. Combined with the long-term care benefits in the bill, it’s likely that both federal and state Medicaid spending could decline. Some estimate that it could cut Medicaid expenditures by at least 23 percent as well as reduce the number of middle-income Americans making Medicaid claims, since the new WISH Act program would be more designed to fit their needs. These savings would be on top off what appears to be a budget neutral bill, with new spending being fully offset by the proposed payroll tax.
The Committee for a Responsible Federal Budget’s president Maya MacGuineas recently praised the WISH Act’s introduction:
"The nation’s long-term care system is broken. We appreciate Representative Suozzi for proposing a fiscally responsible fix. The WISH Act’s new spending is paid for with a payroll tax, and may even reduce deficits by lifting some of the burden of long-term care costs currently imposed on the Medicaid program. We commend Rep. Suozzi for not passing costs on to the next generation.”
