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N.Y. health employers want state to pick up $2.9B tab for higher minimum wage

When Gov. Andrew Cuomo called for raising the minimum wage in New York to $15 for all public- and private-sector employees during his State of the State address earlier this month, the audience cheered. Some said it was about time he joined the "Fight for $15," which fast-food workers began striking for in 2012.

But healthcare employers are not yet ready to join the celebration. As far as they're concerned, if Cuomo wants to raise the wage, the state should agree to pick up the tab.

Hospitals, nursing homes and other healthcare providers have long voiced concerns over a proposed statewide $15 minimum wage. At Monday's health and Medicaid budget hearing in Albany, industry representatives appeared to accept that the wage hike is coming and got specific about what they will need from the state in order to cover the expense.

The salary increase would cost hospitals, nursing homes and home care providers $2.9 billion annually once fully implemented in 2021, the Healthcare Association of New York State estimated. That figure accounts for accompanying benefits and the boost to higher pay grades that would be needed to keep workers' salaries commensurate with their responsibilities, said Dennis Whalen, the trade group's president.

"I'm concerned about how you folks view the $15 minimum wage," Sen. Gustavo Rivera, D-Bronx, told Whalen. "It's something a lot of us have been fighting for."

Whalen told legislators he was not opposed to the concept of a wage hike. But he said he wanted to be sure that any funding the state offered providers to cover it would not be counted toward the overall cap on the Medicaid budget.

The Healthcare Association estimates a $15 minimum wage will cost hospitals $570 million annually and nursing homes $600 million. Home care agencies, which often employ low-wage workers for 24-hour shifts, would see the highest wage hike: more than $1.7 billion per year, according to the group's calculations.

Recent changes to federal and state regulations that improved worker compensation at home care agencies in New York already have put those providers under financial distress, said Laura Haight, vice president for public policy at the New York Association of Health Care Providers. She said many home care agencies haven't received funds that the state promised would help offset the higher wages, and some have cut workers' hours or refused new cases.

"We operate under very narrow margins," said Haight. If the $15 minimum wage goes through, she said, the state should reimburse providers in advance for complying.

Haight added that she does think home care workers deserve fair wages. "The problem is we have to pay them in real money," she said.

The wage hike would negatively affect patients, according to testimony from the Home Care Association of New York State, which noted it would "raise the cost of home care for individuals paying privately, and create an unrecognized/unreimbursed cost for Medicare-covered patients."

Nonprofit community-based providers could benefit from the ability to offer workers higher salaries, according to testimony by Daniel Lowenstein, senior director of public affairs at the Primary Care Development Corp. Better wages would help the organizations address the recruitment and retention issues they face in hiring workers for new positions that deal with care management and patient outreach, he said.

But Lowenstein added that community-based organizations are often strapped for cash and any salary increase would have to be publicly funded.

Labor representatives from SEIU 1199 agreed that healthcare providers will need help with absorbing the costs, but pointed out that some of the burden would fall on the federal government, not just the state. The union also said the estimates the Healthcare Association provided were outsized because they included costs that were not directly related to raising the minimum wage, like the cost of paying supervisors more.

"We will continue to work with the governor and the legislature to make sure that the 2016-17 New York state budget provides funding for the direct cost of raising the wage for Medicaid-funded workers," said George Gresham, president of SEIU 1199, in a statement. "Raising the minimum wage for healthcare, home care, and other critically needed workers isn't just the right thing to do, but will increase quality of care and reduce turnover while growing economies across New York state."

"Health employers want state to pick up $2.9 billion tab for higher minimum wage" originally appeared on the website of Crain's New York Business.



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