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Louisiana Boosts Direct-Care Wages in Katrina's Wake
April 13, 2007
Earlier this year, the Louisiana Department of Health and Hospitals (DHH) received legislative and budgetary approval to implement a $2-an-hour wage pass-through for the state's Medicaid-funded direct-care workers. The wage increase, which awaits approval from the federal Center for Medicaid Services, is intended to address workforce shortages and turnover in a state that suffers acutely from both.
Policymakers in Louisiana have long tried to raise wages for frontline staff. Kathy Kliebert, Assistant Secretary for the Office for Citizens with Developmental Disabilities, says a number of red flags inspired her to develop the state's new pass-through. Among them were a study indicating that Louisiana's direct-care worker wages were the lowest in the nation and the state's own 2005 findings of a wage disparity of nearly $3 an hour between private and public institutions in long-term care.
The economic impact of Hurricane Katrina made it difficult to get approval for the pass-through last year. But this year, explains Kliebert, with revenues from rebuilding efforts increasing the amount of state sales tax collected, ''we were able to plead our case that providers are unable to hire and retain workers. They could not compete with the fast food industry.''
Federal help following the hurricane addressed some staffing issues, but according to Hugh Eley, Assistant Secretary of the Louisiana Department of Health and Hospitals Office of the Aging and Adult Services, this help ''did not reach down to the direct support workforce.''
Louisiana long-term care facilities have long suffered from problems with recruitment and retention, which Kliebert and Eley believe are due in large part to low wages. But in August of 2005, Hurricane Katrina made a bad situation worse, wreaking havoc on the state's long-term care infrastructure. This was particularly the case in and around New Orleans, where thousands of workers and residents were affected.
''People keep saying that in ten years [the care gap] will be critical,'' says Sharon Delvisco, acting director for the Community Living Initiative at the Louisiana State University Health Science Center. ''In greater New Orleans right now, it's beyond critical. If people could take a snap shot of what's happening here now, they'll see what it'll be like nationally in ten years.''
''There are people in the New Orleans area that are eligible for services but can't find the help,'' says Kliebert. According to Warren Herbert, president of the Home Care Association of Louisiana, the destruction of infrastructure—including such basic necessities as water lines, gas lines, sewage, and utilities—has had a devastating effect on the workforce. The lower ninth ward, a neighborhood particularly hard-hit by the hurricane, housed many service workers. ''A lot of folks that were providing services,'' Herbert explains, ''didn't have homes to go back to.''
With a significant number of nursing homes and hospitals still closed down after the hurricane, many elderly and disabled people are being sent to home health agencies—which, according to Herbert, are often operating at capacity. State records indicate that only 44 percent of licensed beds in New Orleans area nursing homes (Orleans and St. Bernard parishes) are operational, primarily due to facility damage and staffing issues. Fifteen nursing homes in these parishes have not re-opened since the hurricane, removing some 2,000 beds.
Peggy Hoffman, now working for Covenant Home, was the executive director of Bethany Home, an assisted living facility which has remained closed since the hurricane. ''The hurricane was very kind to the building,'' she says. ''No damage was done, but the difficulty is that we have no staff...an entire staff is needed.'' With the return of services such as phone and sewage to Bethany, Hoffman believes it may be one of the first New Orleans area nursing homes to re-open. But without professional administrators or frontline staff, she's skeptical that it will happen.
According to Delvisco, ''there just aren't enough people to hire...people don't relocate to take this kind of job.'' After the hurricane, employers like McDonalds and Burger King were paying as much as $10 an hour to attract workers. Wal-Mart, paying similar wages, was bringing people in from Mississippi on tour busses to staff their stores. In this environment, long-term care facilities were forced to raise their wages as well, though reimbursements had not yet increased. ''Providers have had to absorb that expense for two years,'' explains Delvisco. For that reason, she argues, the wage pass-through will more likely help address care gaps in other parts of the state, where providers have more of a shot at providing competitive wages relative to other employers.
Kliebert and Eley agree. ''We still have a very limited amount of people to draw from and this wage increase is not going to come close to solving the issues,'' explained Kliebert. ''There are other issues [in New Orleans], such as affordable housing and transportation that need to be addressed.'' But what the pass-through can do for providers in the New Orleans area is to compensate them for increases that they've already put forward. In the end, though, ''It will probably be more beneficial to people outside the New Orleans area.''
For Kliebert, the biggest worry is implementation. ''This is a significant amount of money for us, and it's really important to me that it gets to the right people.''
Though the procedures involved in the wage pass-through allow for some flexibility in the implementation of the rates, the majority of the funds allocated will go directly to workers. At least three quarters of the increase must go to workers' wages, with the remainder being used toward employer payroll taxes, FICA, workers compensation insurance, unemployment insurance, and/or employee benefits such as health insurance, retirement plans (401k), annual and sick leave, and short- and long-term disability.
One of the most significant aspects of the wage pass-through is its setting of a wage floor for direct-care jobs in the state. Louisiana is one of 22 states that do not have their own minimum wage, setting wage minimums at the federal rate of $5.15 an hour. The wage pass-through stipulates that providers submit a quarterly report for the quarter ending June 2007 to verify that all employees are being paid at least $6.65 an hour ($5.15 hour + $1.50 in wage pass-through funding.) While the wage pass-through would be in effect for one year, the ''intent is to make it ongoing,'' explains Eley, as the language in the pass-through explicitly creates a permanent new wage minimum for direct-care workers.
Not all direct service workers will receive a wage increase, but providers must show an increase in overall wages and benefits between June 2005 (before Hurricane Katrina) and June 2007 that corresponds to the amount of reimbursement received. Providers will also be required to fill out a survey designed to track turnover and retention information.
For Kliebert and Eley, the pass-through is an important first step in a longer process. Its goal, they say, is to ''come closer'' to paying the living wage that is, they believe, a key component in creating an adequate and stable direct-care workforce.
Click here for a description of wage pass-through structures and an analysis of their impact.
By Hadas Thier
Paraprofessional Healthcare Institute
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