Op-Ed: Long-Term Care Providers Need State Help with New Minimum Wage

Jon Dolan | February 26, 2019 | Opinion
Every $1 increase in the minimum wage will cost nursing facilities up to $35 million a year and will cost assisted living facilities about $4 million annually

Jon Dolan
All New Jerseyans deserve care and comfort in the later years of their lives. For 31,000 people of tenuous financial means, that responsibility is in the hands of members of the Health Care Association of New Jersey and other licensed long-term care providers. In our facilities, we proudly provide quality care, around the clock, to people whose average age is 85 — many of whom are frail, blind, or disabled.

Today, our ability to deliver these needed services is threatened. State policy changes are needed to keep many long-term facilities open, attract quality employees, and offset the impact of a higher minimum wage.

State and federal dollars, under Medicaid, contribute $1.8 billion a year for the care of aged, blind, and disabled people who live in state-licensed special care nursing facilities, skilled nursing facilities, assisted living residences, and comprehensive personal care homes. That funding represents a compassionate public investment in people who have worked hard, raised children and grandchildren, and contributed to New Jersey’s vitality for decades.

The backbone of any long-term care facility is the working men and women — nurses, certified nurse assistants, therapists, and others — who provide medical care and assist with the activities of daily living: walking, dressing, feeding, and hygiene. New Jersey took an important step to help those workers with a law that phases in an increase in the state minimum wage to $15 an hour over five years.

As well-intentioned as the new law is, it raises issues that must be addressed to assure that all of New Jersey’s elderly can get the care they need. Some businesses in New Jersey can pass along to customers the added cost of paying a higher minimum wage. Members of the Health Care Association of New Jersey can’t. By law, skilled nursing facilities can’t bill more than the government-set rates for care provided to people on Medicaid or Medicare. And, the law requires that Medicaid recipients make up at least 45 percent of our residents. Bottom line: The number of private-pay residents is too small to cover the cost impact of a higher minimum wage.

Years of chronic underfunding

This new challenge comes on top of years of chronic underfunding that is causing an insolvency crisis. Nursing facilities already lose an average $47 a day on each Medicaid beneficiary in their care. Only three states — New York, New Hampshire, and Wisconsin — rank lower by this measure. Based on a survey of our members and other analyses, we estimate that every $1 increase in the minimum wage will cost nursing facilities between $30 million and $35 million a year and will cost assisted living facilities $3.5 million to $4.1 million.

Are these serious problems? Yes.

Are they insurmountable? No. Not if the governor and Legislature put the money where the mandate is.

That requires two things. One, adopt legislation that appropriates at least $15 million in state dollars for nursing facilities and $1.7 million for assisted living residences in addition to the other appropriations from the state budget that will take effect on July 1, 2019. When matched with federal dollars, this will make sure Medicaid providers have the financial means to fully support their workforce and continue providing top-quality care.

Two, convene a caregiver workforce meeting that includes the relevant state departments, the industry, and workers’ representatives to develop workforce initiatives aimed at helping to recruit, train, and retain qualified direct-care staff. New Jersey already faces a serious caregiver shortage, and competition from retail and service industries will heighten when the minimum wage increases.

Other states have found ways to protect long-term care residents by building into providers’ subsidies the resources to make up for minimum wage increases. We need New Jersey to take a similar approach.