There are a number of states where home-based care providers are seeing the cost of employing caregivers and clinicians increase.
California, Minnesota and New York are just a few examples of states where legislative changes have brought on higher wages.
At the start of 2023, at least 23 states increased their minimum hourly wages as part of their “fight for $15” efforts or to adjust for cost-of-living inflation. The increases, the Economic Policy Institute estimates, equate to over $5 billion in pay bumps for several million workers.
Along with California, Minnesota and New York, some of those states were Illinois, Michigan, New Jersey, New Mexico and Virginia. It’s important to note that many cities and municipalities pushed forward more localized pay boosts as well.
While most home-based care providers and stakeholders agree that workers need and deserve pay increases, they also point out the importance of actions that will help offset some of these costs and allow them to continue operating.
Historically, caregivers have dealt with low wages. About 40% of the direct caregiver workforce live near the poverty line, and 43% are reliant on public assistance programs, according to data from PHI.
California
In February, Sen. María Elena Durazo (D-Los Angeles) introduced legislation that would bump up the minimum wage for health care workers statewide.
If passed, S.B. 525 would raise wages to $25 per hour for nurses and caregivers in 2024, as well as other health care workers.
“Women and workers of color who are the backbone of our health care system have been underpaid and devalued for decades,” Durazo said in a press statement. “They’ve risked their lives and health and are working multiple shifts only to take home poverty wages in understaffed facilities. We need to ensure that health care workers are paid livable wages so that everyone can have access to timely quality care.”
Providers working in the state see eye-to-eye with lawmakers on the importance of ensuring that caregivers and clinicians are paid well. However, they believe that bills like this one often lead to less care, especially for seniors.
“We are respectful and very cognizant of the need to pay caregivers well, but we also need to make sure that we’re keeping that care available,” Dean Chalios, president and CEO of California Association for Health Services at Home, told Home Health Care News. “Everytime the minimum wage is increased, that means that providers of home care have to increase their costs. This prices many Californians out of the home care market price, particularly those in the middle class.”
Chalios noted that while in some cases these costs are covered by private insurance or out-of-pocket pay, in many cases providers depend on Medicare and Medi-Cal – the California Medicaid program – for reimbursement.
The challenge for providers is that reimbursement rates are not keeping up with the rising minimum wage. Chalios sees this as “unsustainable” for providers.
“Employers in the home care space have had a tremendous increase in costs related to the public health emergency,” Chalios said. “We are struggling with staff recruitment and worker shortages, and then of course, everything else has increased in price including workers compensation costs and the cost of rent. All of our overhead has all increased.”
For now, California providers are watching the bill closely, and Chalios is calling for more balanced measures to meet the needs of providers, as well as caregivers.
“When it comes to the minimum wage, it’s really a dollars-and-cents calculation,” he said. “Increasing those reimbursement rates is really what needs to be done. Medi-Cal’s reimbursement is woefully inadequate to cover the cost of care, so we have an ongoing policy to go to the legislature and to the administration and ask for higher reimbursement rates.”
Minnesota
In what’s being dubbed Minnesota’s home care workers’ “biggest pay raise in history,” caregivers will go from making $15.25 per hour to $19 in 2024, and $20 per hour in the following year.
This is the result of a tentative agreement between the State of Minnesota and SEIU Healthcare Minnesota and Iowa following months of negotiations. The minimum wage pay increase applies to personal care assistants who work in the home, through a program funded by Medicaid and state subsidies.
Along with the initial pay bump, the agreement establishes a pay scale. This means veteran workers can earn an hourly wage of up to $22.50, and workers who have been on the job for at least six months in July 2023 are eligible for a one-time bonus.
Kathy Messerli, executive director at the Minnesota Home Care Association, views the minimum raise as a caregiver recruitment tool amid a challenging labor market.
“Yes, there is somewhat of a concern when you’re going to be paying people far more money,” she told HHCN. “However, we need to pay more money to bring them into the marketplace, so we don’t necessarily see that as unfortunate if, in fact, our bills pass, because we do have some bills over at the state legislature requesting that rates be increased.”
Indeed, the Minnesota Home Care Association believes that as long as pay increases are matched by rate increases, providers should be able to continue operating smoothly.
“If we don’t get greater reimbursement, it will be very difficult and the access to care will absolutely be impacted,” Messerli said.
The trouble is that while rate increase may take place, the possibility that it ends up being inadequate is something that can’t be ignored.
“I’m a bit doubtful that it’s going to be an adequate required reimbursement trade,” Olga Baumberger, a board member at Minnesota Home Care Association, told HHCN.
Aside from changes in California and Minnesota, all eyes have been on New York and how its ongoing home care worker minimum wage hike is playing out.
While home care workers received an additional $2 per hour above the state’s $15 minimum wage, by law, as well as another $1 increase beginning in October this year, some caregivers have claimed they have not received the money.
Companies featured in this article:
California Association for Health Services at Home, Minnesota Home Care Association
