According to the National Association of Home Care and Hospice, there has been a 125% increase in demand for caregivers. The lack of caregivers has reached a critical point. Because of the demand, wages have soared. In addition, on January 1st of this year, the minimum wage went up in 20 states. Five other states (Connecticut, Florida, Nevada, Oregon, Virginia) and the District of Columbia have minimum wage increases starting in July or later in the year. The increase in caregiver wages has forced the hourly care rate to increase 8.3% from 2018-2020.[i]
Genworth’s research suggests that the following factors are contributing to rate increases:
- Labor shortages
- Employee recruitment and retention challenges
- Personal Protective Equipment (PPE) costs
- Wage pressures
- Regulatory changes (including updated CDC guidelines)
- Supply and demand
To learn more, visit www.Genworth.com/CostofCareTrends
CNBC recently reported Chipotle would raise wages to an average of $15 an hour by the end of June. Bank of America said it would raise minimum wages for its hourly workers to $25 an hour, from the current $20, by 2025. Under Armour followed by announcing it would raise its minimum hourly wage for its retail and distribution workers to $15. These types of moves will put even more pressure on home care agencies to increase their caregiver wages.
Low-income seniors 65+ are at the most significant risk. Agencies will need to increase their hourly rate to keep their doors open, affecting low-income seniors’ opportunity to obtain home care. Partnership for Medicaid Home-Based Care (PMHC) stated, “If the minimum wage is increased yet there is a failure to require states to increase reimbursement rates for personal care services covered under Medicaid HCBS programs, it will further limit both access to care delivery and significantly limit Medicaid HCBS providers’ ability to recruit home care workers into the health care workforce.” Medicaid and the Department of Veterans Affairs need to look at benefits that low-income Veterans and surviving spouses depend on to provide them the care they need, such as Pension with Aid and Attendance. Each year the Department of Veterans Affairs adjusts the VA benefit pay rates based on the Social Security Administration’s annual cost-of-living adjustment (COLA). Without a serious evaluation by the Social Security Administration and the VA, seniors will lose care hours or receive subpar care.
In 2019, the median companion/personal caregiver wages were $11.99 per hour, and CNA wages were $12.99 per hour. Just two short years later, in 2021, caregiver wages rose 8.6% to a median of $13.02 for companion/personal caregivers and 5.4% to $13.69 for CNA’s. In comparison, the VA’s Pension with Aid and Attendance rose a mere 3% or $55 per month for Veterans, $37 per month for surviving spouses, and $65 per month for couples. The result of these increases is less care for the client.
We believe everyone deserves quality care regardless of their income or financial situation. In 2019, 4.9 million people aged 65 and older lived in poverty. People aged 80 and older have a higher poverty rate than any other age group. Women aged 80 and older had the highest poverty rate among older women and men in all age groups at 13.6%. [ii] Unfortunately, these numbers will get worse as prices go up and those on a fixed income fall behind.
According to Statista, there are nearly 500k Veterans over 65 living in poverty. The share of veterans who served during the Vietnam War, Korean War, or World War II was 44.4% in 2019. More than half of veterans today are over 65 years old[iii]. Statistics suggest that 70% of older adults in the U.S. will require help with activities of daily living at some point in their lives. Given this information, it is reasonable to conclude that the financial support needed for our Veterans and surviving spouses need attention.
In his recent $2 trillion Infrastructure Plan, President Biden includes $400 billion to be spent over eight years on home and community-based services. The idea is to strengthen the long-term care system. Biden’s proposal doesn’t specify how the $400 billion in additional funding would be spent. Biden did state that access to home and community-based care would be expanded and caregivers would receive “a long-overdue raise, stronger benefits, and an opportunity to organize or join a union.” The idea of a $400 billion boost to the home care industry sounds appealing, but at what cost to our low-income seniors. An expansion to Medicaid will be likely, but will it also include an increase in reimbursements?
The same goes for VA benefits, will there be a substantial increase to the benefit? Has this discussion been on the table?
Politically it will be a challenge as both main political parties are not in agreement on the idea of this being part of an infrastructure plan. Regardless, these concerns need to be raised.
What can we do? We need to speak up. The idea of paying caregivers a higher wage isn’t something most of us would disagree with, but it comes with a price—the result of higher wages and home care rates affects low-income Veterans, surviving spouses, and non-Veterans alike. We need to be their voice. Reimbursement rates should reflect the rising cost of home care. You, as an agency, deserve it, but most of all, those affected deserve it.
Please contact your Members of Congress and the United States Senators to emphasize the need to match the rising cost with a corresponding increase in VA benefits, Social Security benefits, and Medicaid HCBS reimbursement rates. To find your representative, use this link https://www.house.gov/representatives/find-your-representative. Use this link for your Senators https://www.senate.gov/senators/contact.
Sample email content (feel free to use):
The rise in caregiver wages is quickly putting home care out of reach for low-income seniors and Veterans. Wages for caregivers have risen 8.6% since 2019, and the VA’s Pension with Aid and Attendance, which serves our low-income war-time Veterans, has only risen 3% or a mere $55 per month. There needs to be a match in increasing costs with a corresponding increase in VA benefits, Social Security benefits, and Medicaid HCBS reimbursement rates. An increase should be considered immediately; otherwise, our seniors and Veterans will be the ones to suffer.
[i] Home Care Benchmarking Study 2021
[ii] Congressional Research Servicehttps://crsreports.congress.gov, April 2021