$15 minimum wage: A hurdle for home health care?

Home health care providers in New York have grown accustomed to doing more with less in recent years as they grapple with late government payments and new costs imposed by the state.

Now, as Gov. Andrew Cuomo moves forward with his controversial proposal to raise the state minimum wage to $15 an hour, providers fear that a wage hike would be devastating for this critical sector.

“What we’ve been getting lately (from the state) is delayed payments years later, but this hit is so significant on the home care industry, there just won’t be any years later,” said Laura Haight, vice president for public policy at the New York State Association of Health Care Providers, which represents home care providers. “If we want home care to be there when we need it, we need that investment upfront before this kicks in. We’re simply at the stage where we can’t absorb any further cuts.”

The Greater New York Hospital Association and the Healthcare Association of New York State have expressed similar concerns about increased labor costs in hospitals and nursing homes, although the governor’s budget does include a $195 million capital fund to help financially struggling hospitals and a Medicaid funding increase of 3.4 percent – $588 million more than the previous year.

HANYS’ written budget testimony estimates that the minimum wage increase would cost hospitals $570 million and home care providers a whopping $1.7 billion annually.

Indeed, legislators in both the Assembly and the state Senate have expressed particular concern about how home care providers will deal with a $15 minimum wage.

“There are other questions on whether the state is going to fund any of these costs that certainly would have an effect on our budget, and that’s going to be one of the hottest issues in our budget for sure,” state Senate Majority Leader John Flanagan told reporters in mid-February. “If the state of New York says you have to have a $15 minimum wage, if they pay for it, that makes it a lot more powerful, but the governor certainly didn’t put any money in his budget to do that.”

Earlier in February, Assembly Health Committee Chairman Richard Gottfried told City & State that ensuring proper reimbursement for the costs of raising the minimum wage is one of his priorities for the 2016 legislative session.

“There are hundreds of thousands of very low-paid home health aides and direct care workers who work in other human services agencies that are almost entirely funded by Medicaid or other state programs, and I believe we need to raise their wages and raise the state reimbursement rate to their employers so that they can pay those wages,” Gottfried said. “It would make sense to provide in the budget raise increases for those low-wage workers that are essentially the state’s responsibility – home health aides and other human service workers. That’s going to be a struggle.”

Flanagan said one of the difficulties his conference has faced is getting accurate information on the costs. The Cuomo administration says it is looking into the potential costs in the health care sector.

“This administration believes in a fair day’s pay for a fair day’s work – especially for home health aides who provide an essential service to our most vulnerable New Yorkers,” Abbey Fashouer, deputy press secretary for the Cuomo administration, said in a statement. “The governor is committed to raising the minimum wage, while at the same time continuing to improve the state’s Medicaid program and maximize taxpayer dollars. We are reviewing the associated costs and remain confident that there is a way to do both.”

The Association of Health Care Providers, which represents about 400 home and community-based home care offices, has already dealt with at least two significant cost increases in recent years. The Home Care Worker Wage Parity Law, which took effect in 2012, establishes a minimum wage requirement for home care aides who perform Medicaid-reimbursed work. Then, this past October, a federal rule change increased overtime costs, Haight said.

In addition, in 2011 the state began an effort to rein in Medicaid costs by implementing a “global spending cap,” limiting spending growth to the 10-year average of the medical component of the inflation index. Cuomo’s proposed executive budget for the upcoming fiscal year would make the cap permanent.

About 85 percent of home care services are provided through Medicaid, according to the Association of Health Care Providers and 1199 SEIU, which represents 400,000 health care workers in the Northeast, including home care workers.

“We of course support the need to pay workers more and, of course, for recruitment and retention purposes, we want to be able to pay our workers more, but for a number of years now there has been ongoing cuts to home care reimbursements,” Haight said. “Right now, we’re operating on such a narrow margin that when the overtime law went into effect in October, with no funding whatsoever, a lot of our industry had to restructure how they did their shifts or reduce overtime or stop taking cases that require a lot of overtime because the Medicaid compensation was not there to support it.”

Despite the concerns Haight has about the potential ramifications of the minimum wage hike, if the state were to cover the costs, she said her organization would throw its support behind the push.

The health care union 1199 SEIU, which supports the proposed $15 minimum wage, is working with the governor and the state Legislature to understand what the costs will be.

“It is true that the state is going to have to invest additional dollars into Medicaid reimbursement to make sure that providers of these services can afford to pay the workers more as the minimum wage goes up,” said Helen Schaub, state policy and legislative director at 1199 SEIU. “We think that there have been some estimates that have been exaggerated about what the cost is.”

Schaub said 1199 SEIU estimates the additional cost in the first year the minimum wage would be phased in would cost $166 million for all sectors – including hospitals, nursing homes, home care and other non-Medicaid services. Haight put that cost at $266 million in the first year for just the home care industry.

The push for a higher statewide minimum wage comes after Cuomo used a wage board last year to increase minimum hourly pay for fast-food workers to $15 and announced the same raise for state workers.

“No one has said they don’t agree that workers deserve to be paid more,” Haight said. “The issue is, ‘How do you make that happen when we’re underfunded and we can’t just raise our rates?’ We’re not like McDonalds – we can’t just raise the price of our french fries.”

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