New legislation that would establish the first minimum wage requirement for health care workers advanced in the California State Assembly earlier this month.
Although the news will be greeted warmly by caregivers in the Golden State, experts in the home-based care space are worried the minimum wage increase will have adverse effects on providers.
“It certainly seems like it’s set up backward,” Angelo Spinola, the home health, home care, and hospice chair at the law firm Polsinelli, told Home Health Care News. “What should be happening with our health care system is we should be looking at what reimbursements rates are, looking at the amount of money coming in, what overhead costs are and determining from there what wages should be paid.”
The legislation passed despite the objection from providers, hospitals and a large nurses union in California.
The bill would set an inflation-adjusted rate of $25 an hour for all health care workers in the state by 2025, which Spinola pointed to as a rather quick turnaround.
Another major challenge a bill like this could potentially pose for providers is that the minimum wage would be for all workers in the health care space, not just caregivers.
“The legislation would apply to everyone who works at a facility: the person who works at a gift shop, your janitors, everybody,” Spinola said. “This will create a disparity in wages and could create problems. If I’m a janitor at a restaurant or a school district, I could be paid one rate, but if I just so happen to work at a health care facility performing the same job, I’m entitled to these higher wages. Which I think creates some legal issues.”
The legislation — backed by the Service Employees International Union of California — would primarily benefit workers in home health, skilled nursing facilities and outpatient clinics, according to the UC Berkeley Labor Center.
Taking a broad approach to the issue of caregiver compensation could come with unexpected challenges.
Similar worries were brought up concerning the proposed rule from the U.S. Centers for Medicare & Medicaid Services (CMS), which would require that at least 80% of Medicaid payments for personal care, homemaker and home health aide services be spent on compensation for direct care workers.
“When you do that and you take such a broad-based approach, you really impact businesses that are not similarly situated,” Spinola said. “There are other ways to do this and the market can do this and the market is doing this. What we’ve seen is that the Fight For 15 isn’t talked about very much anymore because market forces, competition and industry have stepped in and created competitive reasons to pay $15 an hour, or around that amount.”
Without a comprehensive plan that accounts for provider margin and the complexity of home-based care, Spinola said the effects of a major increase to the minimum wage could have a drastic impact on the state’s providers.
“We’ve seen this already in California, where the government has truly run businesses out of the state into more favorable states where they can operate at a better margin,” Spinola said. “I may be biased, but I look at this approach as throwing a hand grenade at something that is really nuanced. It’s not an effective strategy.”
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