John O’Connor

Some say that getting old and going bankrupt can happen two ways: gradually, then suddenly. Perhaps the same will hold true for states’ attempts to fix long-term care funding.

For decades, state lawmakers have been trying to find a recipe that unties this Gordian knot.

One approach gaining newfound popularity amounts to healthcare rationing by another name. Bean counters are embracing Medicaid block grants for two simple reasons: They make it easier to predict costs and to eliminate services. Providers and well-informed consumers despise this solution, as it relies on the bag-of-money concept. As in, states get a bag of money to spend. When the bag is emptied, there is no more money to be had.

Now unless you are a fan of tough love without the love, this option may not be the best way to solve the funding challenge. Fortunately, it appears a better approach may be emerging. But in only one state so far.

Last week, Washington Gov. Jay Insleee (D) signed into law a measure that creates The Long Term Care Trust Act. The legislation establishes the nation’s first social-insurance program that helps pay for long-term care.

Here’s how it works: State residents will pay 58 cents on every $100 of income into a state trust. Once they have contributed to the fund for a decade — or three years, should they encounter a major disabling event — they are eligible to tap $100 a day for help with activities of daily living. The lifetime limit is $36,500.

“This legislation is one way for our state to push back, to ensure that all Washingtonians have high-quality health-care insurance, an option they can afford that is available across the state of Washington,” said Inslee, who also happens to be running for president. Already, a number of other states are considering something similar. They include California, Illinois, Michigan and Minnesota at this writing.

If reading this fills you with a sense of déjà vu, you are not alone. In fact, the 2010 Affordable Care Act did include a public long-term care insurance instrument, the Community Living Assistance Services and Support (CLASS) Act. But for reasons that are still being debated, the Obama administration never implemented the measure.

To be sure, Washington State’s new law is not perfect. And it remains to be seen how fiscally viable it will remain once residents start turning in their chits.

But it’s a start. And it’s a vast improvement over block grants. That is, unless you’d rather be left holding the bag.

John O’Connor is McKnight’s Editorial Director.