Medicare and Medicaid payments to nursing facilities, amounting to more than $80 billion in calendar year 2013, are the most visible way that government financially compensates the nursing home industry. In addition, but generally unacknowledged, federal and state governments heavily subsidize the industry through needs-based public benefits that many of the industry’s low-paid workers receive. A recent report in Pennsylvania highlights some of the public benefits relied on by low-paid workers. The report goes on to describe the positive effects for residents, workers, and taxpayers of increasing the minimum wage for all workers to $15 per hour. Legislation introduced in the Pennsylvania state legislature seeks to do just that, preventing the nursing home industry from shifting the costs of workers’ public benefits to taxpayers.
Report: Nursing Home Jobs that Pay
Pennsylvania’s Keystone Research Center’s new report, Nursing Home Jobs that Pay, explains the extensive public subsidies received by the nursing home industry in Pennsylvania. The report also explains how raising the lowest-paid workers’ wages to $15 per hour would improve workers’ lives, boost state and local tax revenues, and improve care for residents by reducing staff turnover and absenteeism.
Keystone reports that the nursing home industry in Pennsylvania received $5.9 billion from taxpayers in 2013 ($4.08 billion from Medicaid and $1.7 billion from Medicare) and self-reported profits of $370 million in 2013 and $407 million in 2014. At the same time, information provided to Keystone by the Pennsylvania Department of Human Services indicates that 14,487 nursing home employees, representing nearly one-third of workers earning less than $15 per hour, received assistance from Medicaid or the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps), or both, at an estimated annual cost to taxpayers of $118 million. These estimates of public subsidies do not include other public benefits that low-paid nursing home workers may also receive, such as “subsidized child care, heating assistance, and food banks,” and subsidized housing.
The Keystone Report demonstrates, on a county-by-county basis, how raising wages for nearly 50,000 low-wage nursing home workers would bring $311 million into the Pennsylvania economy.
Pennsylvania Bill: Nursing Home Accountability Act (House Bill 1449 (Rep. Ed Gainey) and Senate Bill 1057 (Sen. Daylin Leach)) offers a legislative approach for requiring the nursing home industry to pay for the health insurance for its workers, instead of shifting the costs to taxpayers. Among the “Findings and Declarations” in the Bill is that:
“Nursing facilities are predominately taxpayer-funded through reimbursements from the medical assistance program and Medicare program” and that “Taxpayers should not subsidize nursing facilities to reap profits while many of their employees are living in poverty.”
The Pennsylvania Department of Labor and Industry reports, “the average wage for nurse assistants is $13.39 and the average wage for dietary and housekeeping employees is $9.81.” PathWays PA, a not-for profit Pennsylvania organization that provides services and advocacy for women, children, and families, finds, “a wage of $15 per hour would meet the sufficiency standard for many, but not all, counties of this Commonwealth for an employee with one child to provide for the employee and child without the need for public assistance.”
The Bill also states, “A worker who faces low wages or part-time work, or both, is too often eligible for taxpayer-funded medical assistance instead of affordable, employer-based coverage. Controlling health care costs can be more readily achieved if a greater share of working people and their families have health benefits so that cost shifting is minimized.”
Accordingly, the proposed Nursing Home Accountability Act has four purposes:
(1) Create a living wage certification program for each nursing facility that provides a base hourly wage of $15 per hour for each directly employed or subcontracted employee of the nursing facility.
(2) Encourage the provision of a living wage to each nursing facility employee by providing information to each nursing facility resident and the public on the wage rate paid to the employees of the nursing facility.
(3) Ensure that each nursing facility pay a nursing facility employer responsibility penalty for health coverage received by each employee of the nursing facility through the medical assistance program and another public assistance program that is fully or partially funded with funds from the Commonwealth, with that penalty based on the costs incurred by the Commonwealth for providing these benefits to the employee of the nursing facility.
(4) Ensure that each nursing facility employee who receives public assistance is protected from possible retaliation by the nursing facility for seeking or obtaining that assistance.
There are two key components of the legislation:
A Nursing Facility Living Wage Certification program “requires each facility participating in the Medicaid program to report” information, in a verifiable and auditable form, about the minimum base hourly wage paid for each job classification and the number of employees in each classification. The Department of Public Health will give a “living wage certification” to each facility whose wages meet the living wage certification standard, which is defined as $15 as a base hourly wage, adjusted annually.
A Nursing Facility Employer Responsibility Penalty imposes a penalty on each facility whose employees are receiving public assistance, with the amount of the penalty based on the “actual cost of providing public assistance to each covered employee for the most recent fiscal year.” The Bill authorizes limited administrative appeals: facilities may “only challenge whether the Department correctly determined the number of covered employees that are the subject of the penalty.” The Department of Human Services may deduct any unpaid penalty and interest from Medicaid payments that are otherwise due the facility and the Department of Health may refuse to renew the license of a facility that has not paid the penalties and interest or agreed with the Department on a plan of installment payments. The Bill provides for interest payments; prohibits practices that designate employees as independent contractors, prohibit employees from enrolling in public assistance, or discriminate against employees enrolled in public assistance; and provides for employee remedies.
Keystone Research Centers’ Executive Director and report author, Stephen Hertzenberg, said, “The nursing home industry can afford to raise wages. It is time for public officials to demand an end to the corporate welfare we are giving this industry.” As the Pennsylvania Nursing Home Accountability Act expressly declares, “Taxpayers should not subsidize nursing facilities to reap profits while many of their employees are living in poverty.”
December 23, 2015 – T. Edelman
 CMS, National Health Expenditures, By Source of Funds and Types of Expenditure: Calendar Year 2013, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/CMSProgramStatistics/2013/Downloads/NATL/CPS_NATL_2.pdf. Nursing care facilities, includes free-standing nursing facilities, continuing care retirement communities, and nursing homes operated by the Department of Veterans Affairs.
 Keystone Research Center, Nursing Home Jobs that Pay (Nov. 2015), http://keystoneresearch.org/sites/default/files/201511_NHFollowUp_FINAL.pdf.
 Report 2.
 Id. 4.
 Id. 5.
 Id. 5-7.
 Nursing Home Accountability Act §102(2).
 Nursing Home Accountability Act §102(6).
 §202(b), 203.
 §303(b)(1). See also §303(b)(2).
 Keystone Research Center, “New Report Reveals Impact of Pa. Nursing Home Industry’s Poverty Wages” (News Release, Nov. 5, 2015), http://keystoneresearch.org/nursinghomewagespresser.
 Nursing Home Accountability Act §103(3).