Improving health benefits for staff: a new report points up reasons for optimism and action

Nursing Homes, March, 2005 by Linda Zespy

Among executives and employees alike, talking about the state of health insurance in this country is about as popular as a trip to the dentist. But a new report from the Institute for the Future of Aging Services (IFAS) at the American Association of Homes and Services for the Aging does more than just recap the bad news about the spikes in costs and dips in numbers of insured caregivers. Health Insurance Coverage for Direct Care Workers: Riding Out the Storm, published by the Better Jobs, Better Care program at IFAS, paints an informative portrait of who the uninsured long-term care worker is, why LTC companies have such a difficult time providing coverage, and how some companies have been able to overcome the obstacles and extend coverage to more caregivers.

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First, the Bad News

The numbers are overwhelming: One of every four direct care workers lacks health insurance coverage. That's approximately 50% higher than the general American workforce (people under the age of 65). Moreover, 40 to 45% of home care aides lack coverage, as well. "These [direct care workers] are the folks who do 60 to 70% of the care of the elderly and people with disabilities," says Robyn Stone, executive director of IFAS, "who themselves don't have access to real good coverage. [Those] who are caring for us aren't doing much better."

Why are long-term care workers hit so hard compared with the general public? A portrait of the typical American without health insurance provides clues. "Uninsureds" are often low-wage workers, usually in service occupations. Those with a high school education are more likely to be uninsured, as are minorities and foreign-born workers.

Especially hard hit are the LTC workers who work for themselves (as in home healthcare) or for organizations with 51 or more employees. Why 51? That magic number comes courtesy of HIPAA, whose regulations--aside from its more famous confidentiality provisions--prevent insurers from denying coverage to those organizations with 2 to 50 employees but offer no protection outside that range. (HIPAA, in case you had forgotten, stands for Health Insurance Portability and Accountability Act.) That translates into hundreds of thousands of self-employed home care aides who can't get health insurance and a significant number of companies with more than 50 employees who can be denied coverage if insurers define them as "high risk."

What constitutes high risk? That, too, has special relevance to long-term care. High risk, in part, means having a largely older workforce, high turnover rates, and exposure to hazardous work conditions (read: lifting heavy patients). Research from insurance industry representatives in Minnesota confirms that LTC workers have higher-than-average costs per hospital admission, higher-than-average number of prescriptions per year, and a higher prevalence of some expensive illnesses, such as diabetes, back problems, and high blood pressure.

Once organizations grow to more than 200 or so employees, they have an easier time at the negotiating table and can consider self-insuring, since the pool of insured people is large enough to absorb the high costs generated by the seriously ill enrollees. However, cost barriers are still huge and may result in sobering trade-offs. For example, many employers have scaled back on who gets coverage, how good the coverage is, or how much the company contributes. One in ten nursing homes and home care agencies that offer health insurance don't pay any of their employees' health premiums.

Even when employers do pay a portion, the employee contribution may be too much for some low-wage workers to afford. Nursing assistants, for example, typically make less than $20,000 per year. A contribution of even $100 a month can price them out of the game. Studies show that as premiums increase above 4 to 5% of family income, enrollment among low-income people falls dramatically.

Expanding Access to Coverage Anyway

Given the formidable barriers, how can employers obtain worthwhile coverage that both the company and the employee can afford? The IFAS report offers several recommendations:

* Review your eligibility requirements. High costs cause employers in many industries to restrict health insurance to those who work a certain number of hours per week, but this policy is especially hard on LTC workers, whose work hours often fluctuate from week to week. Consider setting eligibility guidelines on the number of hours worked per month instead.

Delayed eligibility--beginning coverage a few months after an employee's start date--also affects LTC workers disproportionately because their rates of turnover are highest during the first few months of a new job. While immediate coverage is no guarantee an employee will stick around, the high costs of recruitment and retention make the idea worth trying.

* Charge less for those who make less. Erickson Retirement Communities is one example of an organization that provides discounted premium contributions for "service level" employees such as nursing assistants and housekeepers. Some organizations are using the discount concept with part-time workers, too. Cooperative Home Care Associates in New York City, for example, pays 100% of the premium cost for full-time employees and prorates that payment for part-time employees.