Sometimes good news is buried in the fine print. While the recently passed state budget undoubtedly sets North Carolina back on education and many other key investments , the spending plan also provides some very targeted assistance to seniors and adults with disabilities. And as a bonus, home healthcare workers—some of the lowest paid workers in the entire economy—will receive a raise.
Specifically, the budget spends an additional $3 million over the next two years to increase the hourly rate at which Medicaid reimburses home healthcare providers for the long-term in-house healthcare services they provide—services that allow our most vulnerable populations to age with dignity in their own homes and avoid institutionalization in a nursing home.
Over the past eight years, North Carolina reimbursed home health agencies just $13.88 an hour  for the services they provided. This reimbursement rate was the fourth lowest in nation and well below what it took for home healthcare employers to cover overhead costs, pay workers enough to make ends meet , and turn a profit.
Going forward, the new reimbursement rate will be $15.60 an hour—a significant improvement that will boost homecare agencies’ bottom lines and increase their workers’ pay. It represents a clear victory for seniors and homecare workers alike and comes at a critical moment for North Carolina’s seniors. As baby boomers retire and our state’s population ages, we will see a steady increase in community members with functional and cognitive limitations and a growing need for direct care that allows community members to continue to live with dignity.
The Medicaid increase represents a positive step forward for seniors because the low wages currently paid to direct care home healthcare workers threatens the provision of this care. Direct care occupations, including home care jobs, offer some of the lowest wages in the state. Median wages in the caregiving occupations pay less than $10 an hour , compared to the state’s $15 an hour median wage. That means that half of all home healthcare workers aren’t earning enough to rise above the federal poverty line despite working full-time.
Low wages increase worker turnover, increase long-run costs for providers, and disrupt the stability of care consumers receive. Homecare workers who don’t earn enough to make ends meet will either work additional hours, pick up second and third jobs, or even leave the profession altogether in search of better pay. All of these problems interrupt the continuity of the care seniors receive by making it more difficult to keep care schedules and find available workers.
Medicaid, administered by the state and jointly financed by the state and federal government, is the primary funding source for long-term services and supports for people with disabilities and seniors. There are two primary programs that Medicaid uses to support long-term care:
- Personal Care Services (PCS) provides care to disabled children, adults, and seniors based on their medical condition, disability or cognitive impairment.
- Community Alternatives Program for Disabled Adults (CAP-DA) provides care to individuals with disabilities as an alternative to institutionalization.
Reimbursements by these Medicaid programs create the framework in which private employers set wages for direct care workers, so the low reimbursement rates are holding down wages for homecare workers serving even non-Medicaid recipients.
The overall lesson: when we choose not to invest in decent wages for home healthcare workers, seniors and individuals with disabilities suffer. Increasing the reimbursement rate for these important healthcare services should lift wages and improve the quality of the healthcare seniors receive in their homes, and that’s something we can all celebrate.