Home care worker jobs are experiencing significant growth in the U.S., as highlighted in a study by the Monthly Labor Review. With an aging population, many individuals who require assistance with daily living activities prefer to stay in their homes rather than move to a facility. However, a recent study found that despite an increase in Medicaid spending on home- and community-based services (HCBS), the wages for home care workers have not changed.

Researchers at the University of Pennsylvania’s Leonard Davis Institute of Health Economics conducted a study to estimate the relationship between changes in HCBS expenditures and factors such as workforce size, hourly wages and hours worked. They used models that accounted for demographic and socioeconomic characteristics, the number of potential HCBS beneficiaries, indicators related to minimum wage and overtime protections for direct care workers, wage pass-through policies and fixed effects for state and year.

Between 2008 and 2019, expenditures for HCBS doubled from $773 million to $1.5 billion. Despite this increase, wages for home care workers remained stagnant at $11 to $12 per hour.

Researchers had anticipated one of two possible outcomes: either increased Medicaid spending would lead to higher wages for workers, or it would affect the size of the workforce without raising wages, as home care agencies might hire more staff without increasing pay. However, the study results did not align with either expectation.

“We find no association between changes in Medicaid HCBS expenditures and wages,” researchers wrote in the study. “For every additional $1 million in Medicaid HCBS expenditures, the expected number of workers increases by 1.2, and the likelihood of workers working overtime also rises. Home care jobs must become more attractive to reduce worker turnover, which is a crucial factor in care access and quality.”

They suggested that simplifying Medicaid’s structure for HCBS programs could make services easier to access and manage, potentially reducing overall spending and allowing for higher wages.

As of 2022, 22 states and the District of Columbia have implemented pass-through laws requiring home care agencies to allocate a percentage of Medicaid funding specifically for labor costs or wages.

Nevertheless, the researchers concluded that more action is necessary.

“Pass-through policies are insufficient when Medicaid reimbursement rates are too low to begin with,” the researchers wrote. “Increasing minimum wages could also enhance worker pay without negatively affecting employment.”