Gathering Places


First lady Vicky Cayetano's long-term care proposal has moved rapidly through legislative committees this session. It hit a snag yesterday when the Senate Health Committee proposed significant amendments and chairman Sen. David Matsuura said he doesn't think the bill will pass this year. But a chief opponent, Sen. Sam Slom, said there is still life in CarePlus. He said the bill will be dead only "when the lights are turned out and the doors are locked" on the Legislature this year.

Pro: Public ought to love it | Con: Hawaii can't afford it



Lawmakers, public
ought to love CarePlus

By Joan P. White
Special to the Star-Bulletin

I support CarePlus, the long-term care financing plan now being debated in our Legislature. We all have so much to gain from this initiative and I believe that if more people really understood it, the Legislature would pass it uncontested.

The Republicans should love this plan because it is private, and because it has a very low cost to consumers. They should love it because it will avoid many people becoming wards of the state and costing taxpayers a bundle. They should love it because it puts power and freedom of choice in the hands of the people. They should love it because we are attempting to privatize a welfare system gone awry. Finally, they should love it because they could get credit from the voting public for doing the right thing.

The Democrats should love it because it is a private plan, not a government plan. They won't have to raise as much in taxes to pay hugely escalating Medicaid bills for the elderly disabled who need long-term care and can't afford it. They should love it because this is a benefit that will truly help people, and government doesn't have to pay for it. They could get credit for doing the right thing for the right reason while paying almost no price at all for it.

The public should love it because this is a plan that puts consumers first. It will add to their financial security. It will make it more likely that they can leave something to their children and charities, and not be forced onto welfare to receive care. Finally, as consumers, they should love it because the plan lets them choose the services they need to meet their personal needs, and not be forced to accept what is dictated to them by a government agency, or the prospect of no help at all.

And, the Republicans, the Democrats and the community should love this plan because it can't be raided by the Legislature because that won't be possible. The bill would set up a private trust fund to be managed by consumers and community and business leaders. The government can't touch it.

The long-term care insurance industry should love this plan. CarePlus is a basic plan. It does not compete directly with the more sophisticated and expensive plans that insurers now offer, but it does a lot to make everyone more aware of the fact that they are likely to need long-term care and of the scarcity of services that are now available. It also provides basic coverage for people who private insurers believe are too great a risk to insure at all. The insurance industry can pick up where the basic plan leaves off, selling supplemental policies that increase and extend the benefits to people who want and can afford greater protection. The industry knows that the private policies it offers are often beyond the reach of most people and, in policies where the premium is low, the benefit is usually not very generous either.

What's not to like about this program?

Critics complain that it is a mandated premium. Yes, it is. In order to play, everyone must come to the party. But most of us don't like to be told what to do. When you think about it though, this plan is only fair. We will all get old, if we are lucky. More than half of us will need some kind of long-term care assistance. This is a way to plan for that assistance at a cost we can afford. We pay auto insurance and home insurance, even though most of us won't ever cause an accident or have our homes destroyed by fire. We do it because it is easy to see the financial ruin that comes to people who don't have that protection and because some types are mandated by law. And those insurances cost us far more each year than the CarePlus insurance premium will.

Some are concerned that this program pays out for only one year. But that is one year longer than we have today. It can be used as a waiting period so that other long-term care insurance plans can become available immediately upon these funds running out.

Moving to the mainland, but still want to have this benefit? No problem. The plan is designed so that as long as you are participating you are eligible for benefits no matter where you live.

If we don't ensure a new revenue stream to pay for the care of the elderly disabled, we are dooming ourselves to enormous tax burdens, or a significantly reduced quality of life for many frail seniors. Baby boomers, who by many accounts have very low savings, begin turning 65 in 2011 and they will place unprecedented pressure on state government to fund long-term care for those in need. If we can't afford the $10 a month, how are we going to be able to afford to pay the taxes necessary to pay for all that care? You can pay a smaller amount now or a much larger amount later. One way or another, we all will pay.

This is a bipartisan initiative and it touches us all. Some of our legislators have shown the courage, vision and political will to do what is right. I know it is an election year, but that should be a reason to pass this bill, not bury it.

Joan P. White is vice-president of Healthcare Association of Hawaii, a trade association whose members include acute-care, long-term, hospice and in-home health-care providers.



CarePlus is a tax hike
Hawaii can’t afford

By Rep. Charles K. Djou
Special to the Star-Bulletin

The Legislature is posed to enact the largest single tax increase in Hawaii history. This tax will not fund our public school system, or improve the economy, or help increase public safety. This tax increase will fund a giant new state government program called CarePlus.

This new program represents a massive tax increase, a dramatic expansion of government and recklessly gambles with the state's financial future. CarePlus purports to be a program to assist with long-term care of our elderly, but it is nothing short of a long-term scam.

The CarePlus program proposed to tax every person between the ages of 25 and 98, regardless of income, $120 a year for long-term care insurance. In return, after a 10-year vesting period, eligible individuals may draw up to $70 a day for one year from the CarePlus program.

Long-term care is an issue that needs to be addressed, but CarePlus is not the solution. The CarePlus proposal is a bad idea for the following reasons:

>> CarePlus is a massive tax increase. Hawaii already has one of the highest tax rates in the nation. The CarePlus program will place an additional $100 million annual tax burden on Hawaii residents already overburdened by a state that overtaxes it residents. To put this into perspective, this would be the same as doubling the excise tax on food to 8 percent.

>> CarePlus hurts the poor. CarePlus will have a greater negative effect on the poor than on the wealthy. The poor, particularly the unemployed, will pay a greater percentage of their income to the CarePlus program than the wealthy.

>> CarePlus is anti-business. The Hawaii labor market is already one of the most heavily regulated in the United States. CarePlus adds yet another layer of regulation further deterring job creation in Hawaii.

>> CarePlus is unnecessary. Private long-term care insurance is available to any individual who wants to purchase it. CarePlus is simply a government program that essentially duplicates a product already offered by the private sector.

>> CarePlus may not comply with federal law. There are no assurances that CarePlus meets federal ERISA regulations, which could make this program taxable as income to the beneficiaries.

>> CarePlus may be another Hawaii Hurricane Relief Fund in the making. Even if CarePlus performs as its proponents argue, expect the state government to eventually raid this fund just like it plans to raid the hurricane fund this year.

There are much more preferable alternate suggestions for handling long-term care.

Many of the problems identified by the CarePlus special committee relate to the high cost of medical care. One way to cope with this problem is by exempting medical care from the general excise tax.

Another way to address the issue of the high costs is for the state to make the purchase of private long-term care insurance more affordable by offering a tax credit to both individuals and employers who purchase long-term care. Individuals can take such a tax credit against their income tax.

The tax credit also should be structured to allow employers who offer long-term care to their employees an offset in their excise tax payments.

The $100 million CarePlus tax increase is a bad idea that should be firmly rejected. To address the issue of long-term care, the state should instead encourage wider utilization of private long-term care insurance through tax credits.

A massive tax increase and a dramatic expansion of state government through CarePlus will only further damage Hawaii's already weakened economy and divert resources to a program that we just cannot afford.

Charles K. Djou (R, Kaneohe-Kahaluu) is House minority floor leader.

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