THE STATE OF HOME BY: DOUGLAS HERVEY, JD/MBA
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T H E S T AT E OF HOME H E A LT H C A R E : A $400 BILLION TIPPING POINT B Y : D O U G L A S H E R V E Y, J D / M B A
T H E S TAT E O F H O M E H E A LT H CA R E : A $ 4 0 0 BILLION TIPPING POINT B y: D o u g l a s H e r vey, J D / M BA INTRODUCTION President Biden’s $2.3 trillion infrastructure proposal known as the “American Jobs Plan” targets improvements to U.S. roads, bridges, drinking water, broadband, the electric grid, and the energy infrastructure. It would also earmark approximately $400 billion for home- and community-based healthcare. The proposal would support a shift in care away from costly institutional settings and hospitals to more affordable and often preferred home- and community- based settings.i The home health provisions are meant to address the growing care needs of senior-aged men and women, reduce the surge in home health waiting lists, and confront the disproportionate impact of low wages and limited access on low-income communities and communities of color.ii Advocates believe that aging relatives and people with disabilities deserve a better quality of life, including services and support to address their unique needs and choices. They also believe that in-home health workers, including professional nurses, therapists, and personal care aides, as well as family and friends, merit a better quality of life too.iii This paper addresses the primary factors driving legislative urgency for home health reform, discusses what the stated home health objectives within the American Jobs Plan are, highlights what advocates and opponents are saying, and shares perspectives on how the proposed plan and broader home health reforms are creating unique opportunities for home- and community- based care. M O T I VAT I N G FA C TO R S At least four factors are driving legislative urgency for home health reforms: (1) projected expenses for the elderly, (2) the current burden on informal care givers who support loved ones, (3) pay for formal caregivers, and (4) access and coverage constraints. First, the Centers for Medicare and Medicaid Services (CMS) projects that U.S. national healthcare expenses will balloon to $6.2 trillion in 2028, an amount that dwarfs the $3.8 trillion in 2019 spending. By 2034, Census data predicts that seniors will outnumber children, which would be the first time in U.S. history. One out of every five seniors are expected to hit retirement age by then.iv CG / 01
U.S. National Health Expenditures ($ Billions)
& Annual Percent Change
$7,000.0 0.07
$6,000.0 0.06
$5,000.0 0.05
$4,000.0 0.04
$3,000.0 0.03
$2,000.0 0.02
$1,000.0 0.01
$0.0 0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
National Health Expenditures Average Annual Percent Change
Source: CMS
Figure 1. U.S. National Health Expenditures
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Second, approximately 53 million adults in the U.S. work as informal care givers supporting family
members dealing with chronic conditions.v A Harvard Business School study found that nearly one-third of
all employees have voluntarily left their job at one point to care for a loved one—and the numbers are higher
for women, immigrants, and people of color. vi A recent report said that in 2017 unpaid home care workers
donated 34 billion hours of care to family and friends at an estimated worth of $470 billion.vii
Most informal care givers are not only time constrained, but they are also not equipped to handle the needs
of aged and disabled loved ones, many of whom have multiple chronic conditions needing specialized care
beyond what informal care givers are qualified to provide.
Third, formal caregiver pay is very low. Studies suggest wages for home care workers often are $12 per
hour, among the lowest wages within the U.S. economy. One in six home care workers fall below federal
poverty thresholds, disproportionately impacting women of color. viii
Lastly, coverage and access constraints abound in home health. COVID-19 has encouraged seniors to age
in place given the pandemic has killed over 174,000 nursing home and other long-term care facility staff
and residents.ix Medicare, however, does not cover daily home-based care for those needing bathing and
dressing support. It also does not cover long-term nursing home stays.
CG / 02Projected Elderly Pay for Formal
Expenses Caregivers
National healthcare Home care
expenses expected to workers average
reach $6.2 trillion by 2028 $12 per hour in
wages
4 Motivating
Factors
Informal Access and
Caregiver Burden Coverage
53 million adults in the U.S. Over 800,000 seniors
provide informal care support are currently wait
for those dealing with chronic listed for home care
conditions
Figure 2. Motivating Factors Behind Home and Community Based Reforms
All 50 states do offer some type of Medicaid services for long-term care of aging or ill Americans their
loved ones care for. But benefits, eligibility, and coverage sharply differ from state to state. Some states
pay family caregivers but not their spouses or legal guardians. Other states pay family members if they do
not live in the same house as the recipient. Pay can differ based on what a Medicaid assessment of need
reveals as well as the average state wages for in-home care aides.x
Medicaid does cover nursing-home care, but states often have strict eligibility rules. And adults generally
do not qualify for support unless they have less than $2,000 in total assets. Medicaid can offer home- or
community-based care to those with disabilities, but states generally have limited enrollment and long
waiting lists. These waiting lists—which can last for up to five years—prevent hundreds of thousands of
eligible beneficiaries from accessing care.xi
CG / 03SERVICES MEDICAID GENER ALLY COVERS IN THE HOME
1. Assistance with Activities of Daily Living (bathing, mobility, dressing/undressing, eating, and
toiletry)
2. Assistance with Instrumental Activities of Daily Living (shopping for essentials, laundry, light
housecleaning, and meal preparation)
3. Home Health Care
4. Home Modifications (to improve accessibility and safety, such as grab bars, widening of
doorways, non-slip flooring, and wheelchair ramps)
5. Vehicle Modifications
6. Durable Medicaid Equipment (wheelchairs and walkers)
7. Adult Day Care / Adult Day Health Care
8. Skilled Nursing Care
9. Respite Care
10. Transportation (medical & non-medical)
11. Therapy Services (physical, speech, & occupational)
12. Meal Delivery / Congregate Meals
13. Personal Emergency Response Services (PERS) / Medical Alert
Source: Medical Planning Assistance
Figure 3. Services Medicaid Generally Covers in the Home
W H AT P R E S I D E N T B I D E N ’ S P L A N P R O P O S E S
President Biden’s American Jobs Plan hopes to strengthen the care economy through job creation, wage
increases, care access, and increased benefits for essential home care workers.
While short on details, the plan asserts that the U.S.’s caregiving challenge began long before COVID-19.
The proposal describes the caregiving financial and coverage constraints discussed above and
underscores the disproportionate impact on women of color. President Biden hopes to address these
challenges through the following three solutions xii:
02
01
Creating new jobs for and increasing
the pay of direct care workers
Providing $400 billion toward improving
03
access to quality and affordable home- or
community- based care for aging
relatives or people with disabilities
Allowing for the free and fair choice
to join a union that allows for
collective bargaining
Figure 4. President Biden’s Plan
CG / 04PROPONENTS AND OPPONENTS American Jobs Plan supporters believe President Biden’s proposal would help raise wages, save costs, avoid nursing home closures, and enhance care quality. They claim the plan would help raise incomes to a more equitable level for home healthcare providers—many of whom are minorities. More than 790,000 home healthcare workers could see their incomes rise.xiii This is significant because employment for home health workers and personal-care aides is forecasted to grow 34% over the next decade, a much faster rate than the national average for other occupations.xiv Supporters also believe the plan would help steer the elderly away from more costly nursing-home care and help protect them from financial savings depletion. They allege that increased federal funding would help prevent more than 1,600 nursing home closures this year due to financial difficulties. And they claim that increasing the pay of direct care workers significantly improves workers’ financial well-being, enhances productivity, and contributes to care quality. One study found that elevated pay for care workers prevented deaths, reduced the number of health violations, and lowered preventive care costs.xvi Congress would need to act by increasing Medicaid reimbursement or enhancing state funds to pay for home healthcare workers. Congressional Republicans, however, recently unveiled their own $568 billion infrastructure counterproposal. It focuses more narrowly on roads and bridges and other types of transportation infrastructure, but it is about one-fourth the size of President Biden’s plan.xvii Plan opponents believe the benefits do not justify the costs and claim that the home health plan has little to do with infrastructure such as repairing bridges and roads and improving broadband internet access. They also believe Biden’s plan would unionize more home healthcare workers, which could increase dues toward Democratic-friendly labor unions.xviii President Biden’s plan does not currently have explicit labor clauses, but Congressional Democrats may insert language that would facilitate unionization. Some states such as Oregon already allow home health workers to collectively bargain as public employees.xix W H AT TO E X P E C T Passing $400 billion in major home health reforms within a large infrastructure bill will be a heavy lift. An all-in-one infrastructure package may eventually become several smaller and more manageable bills. A legislator can more easily oppose a broader infrastructure law that not only addresses bridges and roads but also supports unionization for home health workers.xx The Democrats may pursue a procedural maneuver known as budget reconciliation to pass the plan’s key provisions with a simple majority. Both parties’ ability to negotiate and compromise on the most important terms will determine to what degree Democrats pursue unilateral action. Experts question what the Democrats can achieve in home health through reconciliation given bills must concentrate on taxing and spending, and any provisions are subject to parliamentarian review.xxi Several tailwinds foreshadow the segment’s bright future even if the American Jobs Plan does not deliver on home health reform. Home care costs less than facility care, demand has increased heavily, and technology is enabling better service and outcomes. CG / 05
Industry
Key HomeTailwinds
Healthcare Tailwinds
There are multiple tailwinds supporting the home health industry.
1 Increasing Demand Number of episodes increased 60% since 2002; outpaces other sectors
2 Lower Cost Alternative Trend to seek cost-saving alternatives rather than expensive facility care
3 Competitive Forces In 2019, top-10 home health providers accounted forTen Federal Regulatory and Legislative Tailwinds
CMS Deems
Home Growing
Loosened 60 Different
Infusion In-Home Variety of
Telehealth Conditions
Therapy Dialysis Professionals
Restrictions Safe for
Benefits Can Bill
Home
Medicaid Value-Based
Loosened MA Bi-Partisan Potential
Benefit Care
Restrictions Leadership Increased Pay
Expansion
Support
Confidential / 5
Figure 6. Ten Federal Regulatory and Legislative Tailwinds
Millions of additional people will receive home-based medical and non-medical services in the coming
years due to private sector tailwinds and bi-partisan support for change. If President Biden and home
health reform proponents get their wish, they will secure increased pay for workers, make Medicaid
coverage of home- and community-based supports mandatory, ensure a minimum amount of covered
benefits from state to state, and eliminate long waiting lists and caps to the number of people cared for.xxx
While home health is not the silver bullet for cost reduction and quality improvement, few would disagree
that home health should be a key part of the health, cost, and quality equation. All signals portend it will be.
i
The White House. “Fact Sheet: The American Jobs Plan.” (March 31, 2021). https://www.whitehouse.gov/briefing-
room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/
ii
The Wall Street Journal. “Biden Infrastructure Plan Would Fund Shift Toward Home Healthcare for Seniors,” (April
12, 2021). https://www.wsj.com/articles/biden-infrastructure-plan-would-fund-shift-toward-home-healthcare-for-
seniors-11618228812
iii
The White House. “Fact Sheet: The American Jobs Plan.” (March 31, 2021). https://www.whitehouse.gov/briefing-
room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/
iv
CMS. “National Health Expenditure Projections: 2018-2027,” (2018). https://www.cms.gov/Research-Statistics-Data-
and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ForecastSummary.pdf
v
Fortune. “Biden’s Infrastructure Plan sets out to Expand how America looks at Eldercare and who gets paid,” (April 8,
2021). https://fortune.com/2021/04/08/bidens-infrastructure-plan-elder-care-homecare-healthcare-medicaid
vi
Harvard Business School. “The Caring Company,” (January 2019). https://www.hbs.edu/managing-the-future-of-
work/Documents/The_Caring_Company.pdf
vii
AARP Public Policy Institute. “Valuing the Invaluable: 2019 Update,” (November 2019). https://www.aarp.org /
content/dam/aarp/ppi/2019/11/valuing-the-invaluable-2019-update-charting-a-path-forward.doi.10.26419-
2Fppi.00082.001.pdf
viii
The White House. “Fact Sheet: The American Jobs Plan.” (March 31, 2021). https://www.whitehouse.gov/briefing-
room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/
ix
AARP. “AARP Nursing Home COVID-19 Dashboard.” (April 15, 2021). https://www.aarp.org/ppi/issues/caregiving/info-
2020/nursing-home-covid-dashboard.html
CG / 07x
Marketplace. “What Counts as “Infrastructure”? Home health care, Biden administration says,” (March 31, 2021).
https://www.marketplace.org/2021/03/31/what-counts-as-infrastructure-home-health-care-biden-administration-
says/
xi
The White House. “Fact Sheet: The American Jobs Plan.” (March 31, 2021). https://www.whitehouse.gov/briefing-
room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/
xii
Id.
xiii
The Wall Street Journal. “Biden Infrastructure Plan Would Fund Shift Toward Home Healthcare for Seniors,” (April
12, 2021). https://www.wsj.com/articles/biden-infrastructure-plan-would-fund-shift-toward-home-healthcare-for-
seniors-11618228812
xiv
Id.
xv
Id.
xvi
The White House. “Fact Sheet: The American Jobs Plan.” (March 31, 2021). https://www.whitehouse.gov/briefing-
room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/
xvii
Senate. “The Republican Roadmap,” (April 2021). https://www.epw.senate.gov/public/_cache/files/f/b/fb56e9d2-
5c5b-45c9-8491-9b82c81a2371/8ECCF625FDADCA9F4E365C1D355D9D42.full-document-gop-infrastructure-plan-6-.
pdf
xviii
The Wall Street Journal. “Biden Infrastructure Plan Would Fund Shift Toward Home Healthcare for Seniors,” (April
12, 2021). https://www.wsj.com/articles/biden-infrastructure-plan-would-fund-shift-toward-home-healthcare-for-
seniors-11618228812
xix
Id.
xx
Marketplace. “What Counts as “Infrastructure”? Home Health Care, Biden Administration says,” (March 31, 2021).
https://www.marketplace.org/2021/03/31/what-counts-as-infrastructure-home-health-care-biden-administration-
says/
xxi
Vox. “Republicans’ Opening Bid on Infrastructure is about a Quarter of the Size of Biden’s Plan,” (April 22, 2021).
https://www.vox.com/2021/4/22/22397517/republican-infrastructure-plan-biden.
xxii
Modern Healthcare. “CMS: Permanent Telehealth Changes Coming to Home Health,“ (June 25, 2021). https://www.
modernhealthcare.com/payment/cms-permanent-telehealth-changes-coming-home-health
xxiii
CMS. “Trump Administration Finalizes Permanent Expansion of Medicare Telehealth Services and Improved
Payment for Time Doctors Spend with Patients,” (December 1, 2020). https://www.cms.gov/newsroom/press-
releases/trump-administration-finalizes-permanent-expansion-medicare-telehealth-services-and-improved-
payment
xxiv
CMS. “CMS Announces Comprehensive Strategy to Enhance Hospital Capacity Amid COVID-19 Surge” (November
25, 2020). https://www.cms.gov/newsroom/press-releases/cms-announces-comprehensive-strategy-enhance-
hospital-capacity-amid-COVID-19-surge.
xxv
CMS. “New Codes for Therapist Assistants Providing Maintenance Programs in the Home Health Setting,” (May 1,
2020). https://www.cms.gov/files/document/mm11721.pdf.
xxvi
CMS. “CMS Announces New Federal Funding for 33 States to Support Transitioning Individuals from Nursing
Homes to the Community,” (September 23, 2020). https://www.cms.gov/newsroom/press-releases/cms-announces-
new-federal-funding-33-states-support-transitioning-individuals-nursing-homes
xxvii
CMS. “2019 Medicare Advantage and Part D Rate Announcement and Call Letter,” (April 2, 2018). https://www.cms.
gov/newsroom/fact-sheets/2019-medicare-advantage-and-part-d-rate-announcement-and-call-letter
xxviii
Modern Healthcare. “Intermountain, Ascension Push for Permanent CMS Home Care Reimbursement Changes,”
(March 3, 2021). https://www.modernhealthcare.com/home-health/intermountain-ascension-push-permanent-cms-
home-care-reimbursement-changes
xxix
Modern Healthcare. “Alternatives to Nursing Homes get $12B boost in COVID-19 Law,” (March 24, 2021). https://
www.modernhealthcare.com/safety-quality/alternatives-nursing-homes-get-12b-boost-COVID-19-law
xxx
Modern Healthcare. “Biden Pushes for Home Health Medicaid Coverage, $400 Billion in Funding,” (March 31, 2021).
https://www.modernhealthcare.com/politics-policy/biden-pushes-home-health-medicaid-coverage-400-billion-
funding
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