Illinois is one of the states that has slowly raised its minimum wage since 2019. The plan is for it to reach $15 an hour by 2025. Once again, on January 1, 2024, the minimum wage went up from $13 to $14 an hour for regular workers and from $7.80 to $8.40 an hour for workers who get tips. That might sound good for low-wage workers, but it has also caused some problems in the healthcare industry, which hires a lot of them.
A new study from the Illinois Health Care Association (IHCA) says that the increase in the minimum wage has caused a lot of healthcare workers to lose their jobs. This is especially true for people who provide home and community-based services (HCBS) for seniors and people with disabilities.
The Effects of the Minimum Wage Increase on Healthcare Workers
According to the IHCA research, which surveyed 200 HCBS providers across the state, 75% were forced to cut their workforce or services as a result of the minimum wage increase. According to the analysis, more than 10,000 healthcare professionals would lose their employment or have their hours reduced by 2024, affecting over 40,000 HCBS consumers. The research also cautioned that the situation might deteriorate in the future years, with the minimum wage set to rise to $15 per hour by 2025.
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The primary reason for the layoffs is that the state has not increased payment rates for HCBS providers, which are already lower than the cost of providing care. According to the IHCA study, the average reimbursement rate for HCBS in Illinois is $18.29 per hour, with an average cost of care of $22.71 per hour. This indicates that HCBS providers are losing $4.42 per hour on each client they serve. The minimum wage increase has worsened the disparity, making it impossible for many suppliers to continue functioning.
The IHCA research also stated that the minimum wage increase has made it more difficult for HCBS providers to recruit and retain talented personnel since they must compete with other industries that provide greater compensation and benefits.
According to the research, the National Association for Home Care and Hospice revealed that Illinois had the greatest turnover rate for home health aides in the US in 2023, at 82%. The analysis concluded that the high turnover rate had an impact on the quality and continuity of treatment for HCBS customers, many of whom have complicated and chronic health issues.
The Consequences of Layoffs on HCBS Clients and the State
The layoffs of healthcare personnel have had a severe impact on HCBS clients, who have had less access to treatment, more isolation, and a higher chance of institutionalization. According to the IHCA research, 60% of HCBS clients reported service reductions or eliminations as a result of the minimum wage increase.
According to the research, 40% of HCBS consumers had to find a replacement provider or worker once their services were disrupted. The program focused on Mary, a 78-year-old lady who lives alone in Chicago and suffers from diabetes, hypertension, and arthritis. Mary used to receive four hours of HCBS every day, which assisted her with personal care, medication management, and housekeeping tasks.
However, following the minimum wage increase, her provider notified her that she could only receive two hours of HCBS each day due to staff shortages and budget limitations. Mary stated that the reduction in services has made her life more difficult and lonely since she must rely on her neighbors and family for assistance. She also expressed concern that if her illness worsened, she may have to transfer to a nursing facility.
The layoffs of healthcare personnel have also had a significant impact on the state, which must cover the increasing expenses of institutional care and emergency services. According to the IHCA research, HCBS is less expensive and more popular among consumers than institutional care, such as nursing homes or hospitals.
According to the research, the average cost of HCBS in Illinois is $41.52 per day, $172.62 per day for nursing home care, and $2,271.43 per day for hospital treatment. The analysis also predicted that the minimum wage rise cost the state an extra $150 million per year owing to the increased need for institutional care and emergency services by HCBS customers who lost their services.
Conclusion
Illinois’ minimum wage rise, which aims to reach $15 by 2025, has unforeseen implications, notably in the healthcare business. According to an Illinois Health Care Association research, 75% of home and community-based service (HCBS) providers were forced to reduce employment or services. Over 10,000 healthcare workers might lose their employment by 2024, affecting 40,000 HCBS beneficiaries. The state’s failure to raise payment rates exacerbates the problem, resulting in service cutbacks, isolation, and possible institutionalization for HCBS clients.