Before other states start to consider minimum wage increases for home care workers, it would be beneficial for them to understand what has – and hasn’t – gone well in New York.
In the spring of 2022, New York legislators passed a law that gave home care workers an extra $2 per hour above the state’s $15 minimum wage. Another $1 per hour will kick in for those workers in October 2023.
The state then told Medicaid providers that it was committed to compensating them for the added costs associated with the wage increase, which could be as much as $500 million in the first year and $7.7 billion over the first four years, per the New York state government. Most of that money would flow to personal care.
What has materialized thus far hasn’t been what advocates imagined when pushing for the increase in the first place.
“I’m sympathetic to the idea that home health aides are doing important work,” Bill Hammond, senior fellow for public policy at Empire Center, told Home Health Care News. “It can be hard on them physically and emotionally, but the state is already making a lot of questionable choices, fiscally. I think they’re also vulnerable to abuse and an overuse of the Medicaid benefit. If they’re not making any obvious efforts to contain those, and the costs are rising at an unsustainable rate, that all is going to have ripple effects.”
At the same time, home care workers are arguing that the money – which is meant to pay home care agencies enough to cover wages, payroll taxes, benefits and other costs – is not getting to them.
Instead, that money is being collected by private insurance companies who are keeping a vast majority of the funding they receive, according to New York Assembly member Karines Reyes.
Medicaid in New York
It’s important to note that New York’s home care Medicaid program is an outlier. Its spending on the home care benefit is roughly the same as the other 49 states combined, according to Hammond.
“We’re kind of off the charts,” Hammond told HHCN. “And it’s been growing rapidly.”
For the most part, home care worker hiring has matched that growth, compared to the state’s population and other states. For example, if retail clerks and fast food counter workers were combined in New York, that workforce wouldn’t be larger than the amount of home care aides, Hammond said.
“I think it’s primarily driven by the structure of the Medicaid benefit, which is unusually broad and generous,” Hammond said. “We have more people who are receiving this benefit, we’re providing more hours and our wages — until recently — have been on the high end, but they haven’t been off the scale.”
According to a federal analysis of 2019 Medicaid spending, per capita expenditures in New York were 8 times the U.S. average. That spending, Hammond said, has produced an “extraordinarily large workforce.”
The number of home care aides employed in New York grew from 250,000 in 2011 to 480,000 in 2021, accounting for almost two-thirds of the state’s net job growth during that period.
Home care workers initially fought for 150% of the minimum wage before receiving the $3 increase.
“Right now, nursing homes, in particular, are having trouble hiring people,” Hammond said. “If home health is paying over $20 an hour, nursing homes would have to match that in order to hire people, right? I think [lawmakers] are thinking about this in a blinkered way. They’re thinking, ‘Well, my assessment of these workers is that they’re underpaid and we should pay them more just out of moral principle,’ without really thinking through the economic consequences.”
From the caregiver side
From a caregiver’s perspective, there is still a lot to be desired when considering the rollout of these wage increases.
State lawmakers and workers’ union groups have said that because of the sometimes confusing implementation of the new laws, a lot of the money is still going to those above-mentioned private insurance companies.
According to a survey by the New York State Association of Health Care Providers conducted in September, 87% of home care agencies said they have had zero insurance companies reach out about the rate change. Of those that did hear from insurers, 61% reported being offered decreased rates.
Angelo Spinola — the home health, home care, and hospice chair at law firm Polsinelli — recently told HHCN how these new regulations can get off to a slow start.
“New York just increased the minimum wage by $3 only for home care, and you don’t hear a lot of coverage about that, which means that it doesn’t always filter down to the provider,” Spinola said. “The provider ends up in a situation where something has changed, law has changed, the provider doesn’t know, and now you’ve got the plaintiff’s bar coming in, sometimes the government. But generally in those situations it’s lawyers that represent the caregivers, bringing suits saying, ‘Hey, you didn’t do this right,’ and the provider is left flatfooted.”
The situation in New York can also be tied to the state Assembly’s political makeup, Emina Poricanin, managing attorney of the New York-based Poricanin Law, told HHCN.
“In other states, Medicare is the primary payer for these types of services,” Poricanin said. “In New York, it’s Medicaid, so you’ve got huge advocacy coalitions between patients and the workers that have been lobbying for these changes, especially now with COVID and how much they were really on the front lines of all of that. It’s created a perfect storm of different factors.”
Lessons to be learned
Because of the way Medicaid is used and reimbursed for in New York, its problems – to some extent – are unique.
Still, other states should understand how New York got to where it is, especially because reimbursement issues are a nationwide problem.
“The phased-in increases to the minimum wage was a great idea in theory, but the reimbursement didn’t keep up,” Poricanin said. “So the providers had the same issues that they had this year, which is why they — in many respects — objected to this. It’s not that they didn’t want their workers to be paid higher. They just weren’t sure that they were getting enough money to pay those workers.”
No state in the country has invested more into home-based care, Hammond said. However, New York’s nursing home population has been declining slower than the national average.
“We don’t seem to be getting that return on investment,” Hammond said. “That tells me they’re not spending that money wisely. They’re not targeting the right people where they can make a difference between going to a nursing home or not. They’re reaching this other group of people who probably aren’t candidates for nursing homes.”
There is a push at the federal level to invest more into home-based care. The key is to invest wisely and in the right places, Hammond said.
“My contention is [other states] should be careful when they do that, or they’re going to end up where New York is,” he said. “Where you’ve spent a lot of money on home care and you haven’t actually addressed the issue.”
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