Biden’s infrastructure plan allocates $400 billion for home care workers, signaling the White House’s pro-union shift.
If realized, his plan could cut into the lucrative home healthcare industry’s bottom line.
Biden’s spotlight on caregiving reflects America’s aging population, which is poised to remake the healthcare industry by 2030.
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In the White House’s $2 trillion funding plan proposed to Congress last month, President Biden tackled the nation’s infrastructure and lack of middle-class jobs.
Within the package, the administration included one surprising nod to the healthcare industry: $400 billion earmarked for home-based care workers for the elderly and disabled.
“Even before COVID-19, our country was in the midst of a caregiving crisis,” the White House said in a press release. The plan called on Congress to expand access to long-term care services for low-income Medicaid patients.
The plan also says it will implement a system to create “good middle-class jobs with a free and fair choice to join a union.” Currently, home care workers earn approximately $12 an hour on average in an industry with turnover rates well over 50%.
According to census estimates, an estimated 20% of the US population will be over 65 by 2030, compared to 16.5% in 2019. Caring for elderly relatives or living independently as you age will become top concerns for most adult Americans. The anticipated demographic shift has also contributed to why the “healthcare support” industry, which includes home care, is projected to grow by 22.6% in the next decade – the largest increase among the 10 industries projected to add the most jobs.
Although the plan is short on further details, the nod to the home care industry and its workers signals a shift in how the Biden administration defines “infrastructure,” as well as support for unionization. According to journalist Richard Schweid, author of “The Caring Class: Home Health Aides in Crisis,” the leaders of the nearly $300 billion home care industry are unlikely to take this challenge to its bottom line standing down. The industry, Schweid told Insider, profits off home care workers’ low wages, and investing in infrastructure that supports its workers is a direct threat to its ability to be a lucrative and fast-growing industry.
“Home healthcare is something almost everybody is going to need in old age,” Schweid said, whether that’s provided by unpaid family members or employed caregivers. “You will need, a certain extent, to rein in the extremely large profits that it generates.”
For-profit home health agencies earned an aggregate 15.8% profit margin from Medicare in 2019, per Home Health Care News, from a survey of 11,300 agencies who received reimbursement.
The home care industry is being pulled in different directions
Ai-jen Poo, the executive director of the National Domestic Workers Alliance, a New York City-based group that represents domestic workers, described the plan as “historic” and “transformative” to The Nation. Poo is a longtime advocate of increased wages, benefits, and collective bargaining within the domestic workforce, which includes home care workers.
Although all home care workers care in some capacity for the elderly and disabled, workers vary widely in their training and educational level. The $12 an hour wage cited in the Biden job plan refers to workers also known as home health aides, nursing assistants, and personal care aides, whose work does not require education beyond a high school diploma.
The vast majority of these workers are employed by small business owners, who make up 78% of the industry, according to PHI, a New York City-based home care advocacy organization.
“Home care is hard. There is no one that has more than half-a-percent of the market on an owned and operated basis. It’s that fragmented,” Seth Sternberg told MedCity News in October 2020. Sternberg is the founder and CEO of Honor, a startup that set out fundamentally change the home care, but ultimately decided to work with it.
“We are not opposed to higher pay,” said Thomas Threlkeld, the communications director for the National Association for Home Care & Hospice, a DC-based industry association. For many years, the group has urged American to recognize the role of caregivers, but Threlkheld said people need to understand the role of reimbursement, from insurers and government-funded programs like Medicare and Medicaid.
“Simply demanding providers pay workers more than the provider is reimbursed is not a workable solution,” Threlkeld said.
VCs and retail giants alike are taking note of the lucrative home care industry
Biden’s $400 billion plan for home health comes as healthcare players of various sizes have already begun trying to anticipate the needs of the expected boom in the US senior population.
America’s aging population bore the brunt of the pandemic, with the overwhelming majority of COVID-related deaths in the US occurring in those over 65 per live CDC data. Although nursing homes attracted attention throughout the pandemic due to their devastating COVID-19 case rates, only 5.5% of American seniors live in nursing homes or assisted-living facilities.
The home care industry raised $228 million in 2020 from venture capital investors. Corporate tech retailer Best Buy has made the “aging in place” consumer health tech the focus of its business. And Primetime Partners, a new aging-focused VC firm debuted in 2020 has invested in consumer tech and e-commerce solutions for aging Americans and their caregivers.
Healthcare investor and analyst Kevin O’Leary told Insider last December that home care is in a VC sweet spot. Because the work doesn’t require as much training or certification, it opens up employment to a larger pool of prospective employees.
Biden’s plan will likely meet resistance
According to NPR, aging advocacy groups like Justice for Aging and AARP have already begun calling for more details on the White House plan. The president of nonprofit elder care trade association LeadingAge argued that current systems are “crumbling.”
However, the plan remains unrealized, with Republicans in Congress rejecting the inherent premise of home care as critical infrastructure and Senate Minority Leader Mitch McConnell calling the plan a “liberal wish list.”
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