A 'Simple Math Problem': $15 Minimum Wage Bill Has Vt. Health Providers On Alert

May 6, 2019

Low-wage workers in Vermont's health care sector could be in for a significant raise if Democratic lawmakers succeed in their effort to establish a $15 minimum wage. But some health providers say increased payroll costs could force cuts to patient services if elected officials don't boost Medicaid funding in the process.  

There are 66,000 working Vermonters who make less than $15 an hour, and many of them work at community-based health providers, like Lamoille Home Health & Hospice, in Morrisville.

Kathy Demars is executive director at the 85-employee nonprofit, where nurses, physical therapists and personal care attendants visit up to 400 patients' homes on any given day.  

"We see people from pregnant moms all the way to end-of-life care, with every bit of care in between," Demars said recently.

Many of the workers here start at just over $11 an hour — and Demars said she'd love nothing more than to give them a raise.

"They earn every penny they get and more. They are really the heart and soul of the community, these folks that are out there," Demars said. "And I always say, "They're sort of silent little angels that are out there doing the work.' And people don't know what they're doing until you need them."

Demars, however, doesn't have the money to give those raises. And if lawmakers increase the state minimum wage to $15 an hour, without a commensurate boost in state funding to pay for it, Demars said she's going to be in a tight financial pinch.

"And I'm not sure how I'm going to do that. ... I don't want to make any cuts to services," Demars said.

"If we're compelled to pay $15 an hour, then there has to be the comparable revenue coming in for us to be able to do it." — Beth Sightler, Champlain Community Services

Lamoille Home Health & Hospice is one of the dozens of community-based health care providers to which state government has outsourced much of the human services infrastructure in Vermont.

Many of those organizations depend almost exclusively on government funding, which means they can't raise prices to offset payroll increases.

Demars said she’ll do everything in her power to avoid cuts to services if the minimum wage legislation passes — private fundraising will be her first report. Others in her position, however, say something will have to give.

"I mean, it's just a pretty simple math problem, right?" said Beth Sightler, executive director of Champlain Community Services, an organization that works with people with intellectual disabilities in Chittenden County. "If we're compelled to pay $15 an hour, then there has to be the comparable revenue coming in for us to be able to do it, you know?"

House lawmakers right now are trying to figure out just how much extra funding community-based providers would need to avoid cutting services, assuming the $15 wage goes through.

One analysis pegs the cost at nearly $30 million over the next five years. But Vermont Secretary of Human Services Al Gobeille said that figure does not cover the universe of physical and mental health workers whose wages would suddenly rise.

The legislative analysis, for example, does not include the more than 5,000 workers at so-called "designated agencies," where pay starts at $14 an hour. It also might not include the more than 7,000 homecare workers for whom wages will begin at $11.55 an hour next year.  

"It is true that we have community providers that this will impact in a very meaningful way, and it will have to be taken into account with their rates or they won't be able to provide services," Gobeille said.

"It's never been about the minimum wage bill for me. It's always been about the Medicaid reimbursement." — Kathy Demars, Lamoille Home Health & Hospice

None of the providers interviewed for this story said they oppose the minimum wage. Demars said she "absolutely" supports it.

"It's never been about the minimum wage bill for me," Demars said. "It's always been about the Medicaid reimbursement."

Some lawmakers who support the minimum wage legislation in concept, however, say they aren't yet convinced that the Legislature will allocate the Medicaid funding increases that would be needed to avoid cuts to services.

"Unless we are able to assure that we are going to be able to essentially make up the difference in Medicaid rates, so that wages can be increased without impacting the amount of services that people receive, it will be difficult for me to vote for the bill," said Waterbury Rep. Theresa Wood, a Democrat.

The trade organization that represents home health agencies in Vermont has asked for statutory language in the minimum wage bill that would tie annual Medicaid reimbursement rates to the increase in the minimum wage.

But so far at least, lawmakers have yet to make any long-term commitments to assure that the increased Medicaid funding will materialize.

"Do we really believe our human services system won't collapse if we don't start treating these employees fairly? The turnover at these organizations, which is largely linked to the stress of the job and the pay — it doesn't solve itself." — Senate President Pro Tem Tim Ashe

The minimum wage bill that passed the Senate back in February would phase in the $15 minimum wage over five years. Late last month, the House Committee on General, Housing and Military Affairs attached an amendment that would allocate $875,000 in Medicaid funding to offset payroll increases in year one of the phase-in.

Waterbury Rep. Tom Stevens, the Democrat who chairs that committee, said even that money could be difficult to find in the budget — "and we're not sure it's there," he said.

Stevens' committee approved the minimum wage bill by a vote of 7-3, but he said providers' concerns are well-founded.

"I totally understand their frustrations, and totally appreciate their trepidation moving forward with it," said Stevens. "And it’s really frustrating because we shouldn't be arguing about how little to pay these folks. These are very difficult jobs."

Stevens said he only recently became aware of how much financial pressure the minimum wage bill will put on Medicaid-funded organizations.

"It shouldn’t have been a surprise, but it was," Stevens said.

Senate President Pro Tem Tim Ashe, a key booster for the minimum wage bill in Montpelier, said low-wage health care workers are exactly the sorts of employees that need the wage boost.

"Do we really believe our human services system won't collapse if we don’t start treating these employees fairly? The turnover at these organizations, which is largely linked to the stress of the job and the pay — it doesn’t solve itself," Ashe said.

And in a $6 billion state budget, Ashe said the money needed to address new cost pressures in the Medicaid system should be easy enough to find.

But providers are skeptical. At home health agencies like Demars’, for example, Medicaid rates for some services haven't kept pace with inflation over the past 10 years.

For many providers, that history makes it even harder to believe that elected officials will come through with Medicaid funding increases if the $15 minimum wage comes to pass.