In an unexpected twist for New York’s budget negotiations, state leaders are considering a plan that would sharply reduce wage supplements for home-care aides and redirect the savings to a subsidy for employer-sponsored health coverage.

The plan is backed by the influential health-care union 1199 SEIU, which represents a large share of the affected workers. It also operates a home-care worker benefit fund, which has faced mounting losses in recent years and stands to receive an infusion of cash if the plan is enacted.

For many aides who are not unionized, however, the plan would effectively negate the benefit of minimum wage hikes promised in January 2024.

New York operates an unusually large and costly home-care program, relied upon by hundreds of thousands of frail elderly and disabled people and their families. Most of the funding – for wages, benefits and everything else – comes from Medicaid, a taxpayer-funded safety-net health plan.

Since 2016, the state has required that home care workers in the downstate region – where home care workers disproportionately live and work – receive supplemental compensation on top of the minimum wage. The compensation can take the form of cash or benefits, such as vacation time or health insurance, and it must be worth at least $4.09 an hour in New York City or $3.22 on Long Island and in Westchester County.

According to draft budget language circulating at the Capitol, these required supplements would be cut as of January 2024 by $1.55 each, to $2.54 in New York City and $1.67 in the rest of downstate.

 

*NSW = Nassau, Suffolk and Westchester counties **Upstate minimum wage subject to change after 2023

 

The draft language does not specify how much money would be saved or where it would go. Insiders say it would be reallocated to Medicaid's Quality Incentive/Value-Added Provider Pool, or QIVAPP. This program pays extra money to home-care agencies that meet certain criteria – including offering a minimum level of employee health coverage. Most of the agencies receiving this money have collective bargaining agreements with 1199.

Those agencies would be expected to pass along the extra QIVAPP money to their insurance provider – which would mean more revenue for the 1199SEIU National Benefit Fund for Home Care Employees, which it urgently needs.

According to the most recently publicly available reports, that fund sustained an operating loss of $51 million, or 32 percent of revenue, in 2021. Its assets had declined by $117 million or 44 percent over the previous five years.

Over that same period, its membership had also declined from about 33,000 to 25,000, a small fraction of the state's roughly half-million home health aides.

Further complicating the picture is an expected hike in the state's minimum wage, which is currently $15 in the New York City region and $14.20 upstate. Budget negotiators have reportedly agreed on a $1 an hour increase in January followed by 50 cent increases in 2025 and 2026.

Under a separate state mandate enacted in last year's state budget, home-care workers are currently entitled to an extra $2 an hour above the minimum. That premium is due to rise to $3 above the minimum starting in October.

The proposed budget language would replace the home care workers' $1 hike in October with a $1.55 increase in January. In New York City and Long Island, that would precisely offset the $1.55 cut to the wage supplement – meaning the downstate workers' total compensation would stay flat in January at $21.09 in New York City and $20.22 elsewhere downstate.

Under current law, those totals would have risen to $22.09 in the city and $21.22 in the rest of downstate.

In terms of straight wages, home care workers will still be entitled to a higher minimum than the rest of the workforce, but it will be $2.55 higher instead of $3. 

It's worth remembering that most home-care workers make more than the legal minimum, meaning that a change in the minimum does not necessarily result in a dollar-for-dollar change in their pay. Still, a cut to wage supplements is likely to translate to a effective loss for some workers – and indirectly their clients.

Because the 1199 proposal involves reducing a wage supplement workers have been receiving for six years, the proposal could alienate some progressive groups and their allies in the Legislature who have campaigned to dramatically increase compensation for home care workers.

Because it tends to favor unionized agencies and workers, it could also face blowback from portions of industry that are largely non-unionized, including the Consumer-Directed Personal Assistance Program that has exploded in popularity over the past decade.

As the proposal gets more public discussion, it will be interesting to see how rank-and-file lawmakers navigate a divisive debate.

 

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

You may also like

After Tariff Shock, Albany Should Face its New Fiscal Reality

This year, for once, state lawmakers' failure to pass a timely budget could prove to be a stroke of luck. When President Trump rolled out his on April 2, Albany leaders had not agreed on a spending plan for the f Read More

New York’s Home Health Workforce Jumps by Another 10 Percent

New York's home health employment is continuing to soar, growing by 57,000 jobs or 10 percent from 2023 to 2024, according to newly released data from the U.S. Bureau of Labor Statistics. Read More

Sorting Fact from Fiction on the Future of Medicaid

As Washington contemplates cutbacks to federal funding for Medicaid, officials in Albany have reacted in two self-contradictory ways. On one hand, they warn of Read More

Immigrant Enrollment in ‘Emergency Medicaid’ Surges to 480,000

One of the biggest drivers of New York's Medicaid enrollment growth over the past decade has been "emergency Medicaid" for undocumented immigrants, newly released state records show. Read More

Medicaid’s Missing Million

The Health Department has been either unable or unwilling to document the eligibility status of almost one million Medicaid recipients, raising further concern about the possibility of large-scale over-enrollment. Read More

New York’s Medicaid Spiral Is Worse Than Hochul Admitted

Although Governor Hochul said last week that the current trajectory of Medicaid spending is "not sustainable," the upward trend is even steeper than she and her budget director have acknowledged. Read More

New York’s Proposed ‘MCO Tax’ Would Generate a Fraction of What Lawmakers Expected

The Hochul administration's proposed "MCO tax" would generate far less than the $4 billion in extra federal aid anticipated by state lawmakers when they approved the concept this spring, according to documents obtained by t Read More

Hochul Hides the Specifics of a Looming Tax on Health Insurance

The Hochul administration has requested federal approval for a multibillion-dollar "MCO tax" on health plans without announcing the move or providing details to the public. As by l Read More