LTC Bullet:  LTC Workforce Blues

Wednesday, May 1, 2002


*** Fair warning:  this is an important Bullet, but a long one.  You may want to print or save it to review at your leisure. ***

*** If you're in the area, don't miss the Center for Long-Term Care Financing's next full-day LTC Graduate Seminars.  We're doing the program in Pittsburgh on May 13 and in Philadelphia on May 14.  Seven continuing education credits are pending approval.  For all the details, including new scheduling for future programs in other cities, go to and then contact Amy Marohn to register ( or 425-377-9500).  We're planning on Dallas, Houston and New Orleans in late September, Atlanta in October, St. Louis in November, and Florida locations in December. ***

*** Because of heavy demand for access to the Center's donor-only zone, we ask your patience.  We'll try to send your keys to The Zone, i.e. your username and password, as soon as possible after you qualify by contributing $100 to the Center for Long-Term Care Financing.  But please give us 72 hours in case we're backed up.  You can contribute online from a bank account or credit card at  Then just email your preferred user name and password to and she'll Zone you in ASAP. ***

*** New content added today to the Center's donor-only zone includes two new LTC Readers:

The LTC Reader #17--Good News on LTCI Improvements:  Long-term care insurance takes a lot of heat in the media.  Criticism focuses on premium increases, rate stability and "agent abuse."  Read Claude Thau on the good news about improvements in policies and reductions in premiums relative to benefits.  In The Zone.

The LTC Reader #18--GAO on Medicare Drug Coverage:  Seniors and their advocates are demanding a new pharmaceutical benefit financed by Medicare.  Is it more important than LTC?  Read David Walker, Comptroller General of the United States.  In the Zone. 

Use The Zone to stay on top of the big issues in LTC. ***


As we've been reporting to you regularly, America's long-term care service delivery system is in a world of hurt.  Nursing-home and home-health-agency bankruptcies, slow assisted living fills, scarce capital, low profitability, quality problems, dismal public relations, and skyrocketing liability insurance premiums usually steal the headlines.  At last, however, the critical problem of long-term care workforce shortages is beginning to get the attention it's due from academics and policy makers. 

The Urban Institute published a report titled "Who Will Care for Us?:  Addressing the Long-Term Care Workforce Crisis" in October 2001.  This study, authored by Robyn I. Stone with Joshua M. Wiener, provides a good overview of the problem, but offers a tortured analysis that misses the primary cause of the worker shortage.  Like most academics, Stone and Wiener call for more "public and private" programs and an extensive new "research and demonstration agenda."  These recommendations will keep the consulting firms, think tanks, and bureaucrats busy, but they won't solve the problem.  Read our "LTC Comment" at the end of this Bullet for our take on what's wrong and what must be done to fix it.

Following are excerpts from the Urban Institute report's Introduction and Executive Summary.  Read the whole Executive Summary at and the full report in .pdf format at  (This is a large file and may take awhile to load.)


"The paraprofessional long-term care workforce--nursing assistants, home health and home care aides, personal care workers, and personal care attendants--forms the centerpiece of the formal long-term care system.  These frontline workers provide hands-on care, supervision, and emotional support to millions of elderly and younger people with chronic illness and disabilities.  Low wages and benefits, hard working conditions, heavy workloads, and a job that has been stigmatized by society make worker recruitment and retention difficult.

"Executive Summary

"Long-term care providers report unprecedented vacancies and turnover rates for paraprofessional workers.  Increasingly, the media, federal, and state policymakers and the industry itself are beginning to acknowledge the labor shortage crisis and its potentially negative consequences for quality of care and quality of life.  These shortages are likely to worsen over time as demand increases. . .

"The Long-Term Care Frontline Workforce

"Most paid providers of long-term care are paraprofessional workers.  After informal caregivers, these workers are the most essential component in helping older persons and younger people with disabilities maintain some level of function and quality of life.  According to recent U.S. Bureau of Labor Statistics (BLS) data, nursing assistants held about 750,000 jobs in nursing homes in 1998, while home health and personal care aides held about 746,000 jobs in that same year.  Like informal caregivers, the overwhelming majority of frontline long-term care workers are women.  About 55 percent of nursing assistants are white, 35 percent are black, and 10 percent are Hispanic.  Most workers are relatively disadvantaged economically and have low levels of educational attainment.  While these paraprofessional workers are engaged in physically and emotionally demanding work, they are among the lowest paid in the service industry, making little more than the minimum wage.  National data on the number of workers with health benefits is lacking, but state and local studies suggest the rate of uninsurance is high.

"What Is the Problem?

"The severe shortage of nursing assistants, home health and home care aides, and other paraprofessional workers is the primary trend influencing the current wave of concern about the long-term care workforce.  National data on turnover rates show wide variation, depending on the source of the data: One source suggests that turnover rates average about 45 percent for nursing homes and about 10 percent for home health programs, while other data place average annual nursing home turnover at over 100 percent a year.  High rates of staff vacancies and turnover have negative effects on providers, consumers, and workers: The cost to providers of replacing workers is high; quality of care may suffer; and workers in under-staffed environments may suffer higher rates of injury.

"The future availability of frontline workers does not look promising.  There will be an unprecedented increase in the size of the elderly population as the 'baby boom' generation ages.  BLS estimates that, in response to this rising demand, personal and home care assistance will be the fourth-fastest growing occupation by 2006, with a dramatic 84.7 percent growth rate expected.  The number of home health aides is expected to increase by 74.6 percent and that of nursing assistants by 25.4 per-cent.  While these projections suggest that the demand for workers will increase, the actual number of jobs may be tempered by the rate of economic growth and the extent to which purchasers are willing or able to pay.  At the same time, as baby boomers approach old age, the pool of middle-aged women who have traditionally provided care will also be substantially smaller.  Finally, with very low population and labor force growth, even a 'normal' business cycle recession would likely yield only a modest increase in the number of unemployed who could become part of a frontline worker pool.

"Factors Affecting the Supply and Quality of Workers

"The success of efforts to recruit, retain, and maintain a long-term care workforce is dependent on a variety of interdependent factors.  One important influence on individuals' decisions to enter and remain in the long-term care field is how society values the job.  Frontline worker jobs in long-term care are viewed by the public as low-wage, unpleasant occupations that involve primarily maid services and care of incontinent, cognitively unaware old people.  This image is exacerbated by media reports that feature poor quality care by providers. . .

"Health and long-term care policies also significantly affect workforce recruitment and retention.  Medicare and Medicaid account for almost three-fifths of long-term care expenditures and therefore play a substantial role in determining provider wages, benefits, and training opportunities.  Regulatory policy on long-term care focuses primarily on protecting consumers, rather than on responding to workers' concerns. . .

"Labor policy plays an important role in determining the size of the pool of frontline long-term care workers.  The federal government invests more than $8 billion annually to prepare primarily low-income and unemployed individuals for new and better jobs.  Ironically, state and federal employment agencies indirectly prevent the long-term care industry from participating in training support programs by requiring that program graduates secure wages that are higher than typical frontline worker salaries.  While these policies are designed to protect trainees from being shunted into poverty-level jobs, they essentially preclude graduates from entering the paraprofessional long-term care labor force.  The federal Work Investment Act of 2000 does not include the same requirements, but the effects of the new law are unclear. . .

"Given the current labor shortage and gloomy projections about the future pool of workers, many providers have expressed interest in immigration as a tool for expanding the potential labor pool.  But immigration of low-wage workers would have to substantially increase to keep pace with population aging and new long-term care demands.  Policymakers must recognize that having low-skilled immigrants fill entry-level jobs in the long-term care industry would likely mean a sharp cultural discontinuity between the client and the caregiver. . .

"Public and Private Efforts to Develop a Qualified, Stable Frontline Workforce

"As noted previously, recruiting and retaining frontline long-term care workers have become a priority for many states.  State initiatives have included the following options:  

"* Establishing 'wage pass-throughs,' in which a state designates some portion of a public long-term care program's reimbursement increase to be used specifically to increase wages and/or benefits for frontline workers. 

* Increasing worker fringe benefits, such as health insurance and payment for transportation time. 

* Developing career ladders by establishing additional job levels in public programs, training requirements, or reimbursement decisions. 

* Increasing and improving training requirements. 

* Developing new worker pools, including former welfare recipients. 

* Establishing public authorities to provide independent workers and consumers ways to address issues about wages and benefits, job quality, and security. 

"Providers, too, are experimenting with a range of interventions.  The literature contains numerous descriptions of programs in nursing home and home care settings that have attempted to address recruitment and retention (although few such programs have been evaluated) . . .

"Developing a Research and Demonstration Agenda

"This broad overview of long-term care frontline worker issues has identified a number of knowledge and information gaps that need to be addressed to further the development of a qualified, sustainable workforce:  We need a better understanding of the sources of the problem, the effects of policy interventions, and which elements in different approaches succeed and fail.  We need an updated profile of the frontline workforce in all long-term care settings that describes their demographic characteristics, wages and benefits, geographic distribution, levels of education, and health literacy.  Policy-makers need to better understand the magnitude of the long-term problem so that they are more motivated in developing this workforce, the barriers to doing so, and the possible consequences of different policy interactions.  Research is needed to assess state strategies' effectiveness at ameliorating the short-term crisis, as well as to determine whether such strategies as wage passthroughs could be replicated successfully.  Finally, we need to develop and test creative ways of developing new pools of workers to meet the demand for services in the future.  Federal and state agencies and private foundations have begun to invest in applied research that will help provide some solutions. . .

"The future of the frontline long-term care worker is, in many ways, a barometer for the health of our aging communities.  Stakeholders at the federal, state, and local levels and in the public and private sectors must come together to find creative solutions to this problem."

LTC Comment:  The foregoing analysis makes the long-term care worker shortage sound much more complicated than it really is.  Think about it.  If you could make more money working in a Taco Bell with fresh vegetables and soda pop than you can make working in a nursing home with blood and feces, where would you submit your resume?  That's the choice potential long-term care workers face.  Why does long-term care pay so little?  Simple.  America's long-term care service delivery system is starved for financial oxygen because it is overwhelmingly dependent on inadequate government reimbursement through Medicaid and Medicare. 

Stone and Wiener observe that "Medicare and Medicaid account for almost three-fifths of long-term care expenditures and therefore play a substantial role in determining provider wages, benefits, and training opportunities."  True enough, but Medicaid and Medicare play a much larger role in dragging down the LTC industry's ability to pay reasonable wages than this quote suggests.  Although Medicaid pays only 48 percent of nursing home costs, it covers two-thirds of all nursing home residents and nearly 80 percent of all patient days.  More than half of what CMS (formerly HCFA) reports as "out-of-pocket" costs are really just "spend-through" of Social Security benefits and other income by people already on Medicaid.  The critical point is that if Medicaid pays even $1 of a resident's care, the facility gets the dismally low Medicaid reimbursement rate even if the resident is paying the bulk of the bill "out of pocket."  Furthermore, only 27 percent of home care costs are paid out of the patient's pocket.  Medicare and Medicaid pay most of the rest. 

Although assisted living is 90 percent private pay and therefore market driven, the assisted living industry was slow to develop for decades and demand for its services remains impeded.  Why?  Many seniors who could afford assisted living by liquidating the value of their homes (80 percent of seniors own their homes and 80 percent of those own them free and clear) choose instead (or the choice is made for them by heirs) to go to nursing homes on Medicaid.  Of course, Medicaid exempts the home and all contiguous property regardless of value. 

Thus, the long-term care worker shortage--like the other problems challenging the long-term care industry--is largely self-inflicted by well-intentioned, but perversely counterproductive public policy.  By creating a public financing monopsony in long-term care, policy makers have choked off the market's ability to determine the value people are willing to place on quality long-term care when they are left free to vote with their own dollars for what they want the market to provide.  Of course, the problem and the solution are much more complicated than we can go into here, so check out the Center's public policy proposal called "LTC Choice:  A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle" at and let us know what you think.