by Emmanuel Bello
The health care community has experienced a large increase in demand for health care services for the elderly. Studies show that by 2050, the elderly community will likely reach 88.5 million people. This incredible increase is largely attributable to our aging baby boomers who now require elder care and who likely will continue to need such services until they die.
The cost of medical care in the United States has steadily increased, causing many elder patients to dip into their personal funds to supplement the portion of expenses not covered by health insurance or Medicare. Medicare is a federal health insurance program set up to help subsidize the cost of hospital and medical care for qualified patients. Even with this program, many of the elderly still find themselves seeking other ways to meet the cost of medical care.
This has led to a significant increase in the number of seniors seeking home health care services. It costs considerably less to receive health care in one’s residence than to stay in the hospital. The patient seeking home health care services may seek to do so through a Home Health Care agency or simply directly hire a Home Health Care Aide. The benefit of going through an agency is that the agency, through Department of Health (DOH) and Department of Labor (DOL) regulations, bears the burden of running a background check on the aide and making sure that the aide is properly certified to provide the needed medical services. Unfortunately, this service comes at a cost which is often higher than the cost of a direct hire.
Until the passing of the recent DOL legislation, whether the patient chose to use an agency or not, the aides were exempt from the Fair Labor Standards Act (FLSA), consequently, they were not entitled to minimum wage and overtime when they worked over forty hours in a week. This was very helpful in keeping costs down, but the patients’ gain was the aides’ loss. Studies show that the majority of aides worked more than thirty-four hours a week, usually spread out among multiple agencies. Since many home health care aides come from lower income households, they need to work these hours to provide for their family.
Although the recent DOL legislation—deeming home health care aides who work for agencies employees for FLSA purposes—was set forth as a remedy for workers who have been marginalized for years, it was really a proposed solution for the increased demand for elder care. Lawmakers hope that by giving aides overtime pay, they will decrease the high turnover rate that plagues the home health care industry. Unfortunately, because lawmakers were motivated by many factors, the least of which was to help improve the social and economic position of a group of workers that have been neglected for close to a century, they may have doomed the industry.
From the patients’ perspective, this may become a huge financial burden. Patients, who are already in need of financial assistance, are now required to pay aides overtime if they use an agency. In many cases, this will compel patients to hire aides directly with price being a major motivating factor. As a result, this will likely lead to lower quality of care and inadequate medical assistance for the patient.
From the aides’ perspective, lawmakers have entitled them to benefits they may never realize. We already know why the patient does not see this as a favorable change, but what about the agency? Agencies charge patients, on average, $15 to $20 an hour and pay workers $10 to $12 an hour. If a patient uses Medicare to cover the cost, the cost is regulated by giving the agency a preset amount for each case. This money received represents the pool of money from which the aides are paid, and the agency will recover its costs while trying to make a profit, which is the goal of any business. However, the recent change requires agencies to pay overtime from that same pool of preset money.
What incentive does an agency have to give an aide more than forty hours of work per week when they are working with such a tight profit margin? I see none. Not only may the benefits provided in the new legislation not reach the aide, it is also unlikely to resolve the issue of high turnover. What is the solution? Increasing the Medicare budget may be the quickest solution and the most burdensome on the taxpayer. What is truly unsettling is that once again, lawmakers have failed to take an honest look at this industry and assess how the legislation affects the major players. This might end up being a lame duck piece of legislation that may never realize its purpose, because patients and agencies will continue to circumvent it.
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 Lieber, supra note 2.
 Minimum wage, overtime protections extended to direct care workers by U.S. Labor Department, U.S. Department of Labor (Sept. 17, 2013), http://www.dol.gov/opa/media/press/whd/WHD20131922.htm.
 Home Care Aides At A Glance, Paraprofessional Health Care Institute (Feb. 2014), http://phinational.org/sites/phinational.org/files/phi-facts-5.pdf.
 Galina Khatutsky, M.S. et al, Understanding Direct Care Workers: A Snapshot of Two of America’s Most Important Jobs – Certified Nurses Assistants and Home Health Aides, U.S. Department of Health and Human Services (Mar. 2011), http://aspe.hhs.gov/daltcp/reports/2011/CNAchart.pdf.
 Lieber, supra note 2.