Impacts of Better Care Better Jobs Act on Home Care and Jobs

Richard Frank and Jonathan Gruber, July 15, 2021

The Better Care Better Jobs Act (BCBJA) features a substantial expansion in home care in the U.S. In this memo, we review evidence on the impact of several of the legislation’s provisions and provide estimates of the impact of the BCBJA along three dimensions:

· Increase in the number of individuals receiving home and community-based services (HCBS)

· Increase in the number of informal caregivers who will get jobs.

· Increase in the number of direct care jobs that will be created delivering HCBS.

In what follows we first review evidence and some relevant facts on some expected impacts from the legislation. We then provide national and state specific estimates in the growth in the number of HCBS beneficiaries and in the number of new jobs.

Background on Population and Potential Impacts of Policy

The BCBJA makes an enormous commitment to expanding access to HCBS. We assess the impacts related to 5 provisions.

· Increasing financial eligibility to 300% of the FPL

· Required coverage of Personal Care Services

· Expanding care giver supports including respite care.

· Expanding access to behavioral health services.

· Promotion of self-directed care.

Before presenting our estimates, there are some important background facts to keep in mind:

1. About 27% of people age 65+ with LTSS needs fall into the bottom 5th of the income distribution and about 30% of them have unmet LTSS needs. This population segment is growing (ASPE, 2020).

a. This population is also twice as likely to use a nursing home as are people with available family. The rate is at least 1.8 times higher than those with available family (ASPE, 2020).

2. There were an estimated 41.8 million caregivers for older adults in 2020. 80% of caregivers are of prime working age (18–64).

3. Personal care services have been shown to significantly reduce the unmet LTSS need among people with low incomes and no family. It will also provide care giver relief and promote employment among unpaid caregivers.

4. Psychological supports and counseling are effective in improving the well-being and mental health of caregivers, especially those that care for dementia patients.

5. Cash benefits, in the context of self-directed care, almost completely offset lost employment income by increasing the number of care givers with income. That in turns increase economic stability of caregivers.

a. That said, direct HCBS services delivered in kind make lower budget demands relative to cash benefits. This is because families will always fully use a cash benefit that they qualify to receive whereas in-kind services are used more sparingly.

To summarize, the expanded eligibility for HCBS and availability of Personal Care Services can be expected to reduce unmet need among low-income households with no available family for care and support. It also can be expected to reduce the likelihood of nursing home entry for some of that group. The expansion of Personal Care Services can also be expected to expand employment among caregivers, improve the mental health and well-being of care givers and increase employment more broadly.

Estimates

In what follows we provide national and state specific estimates in the growth in the number of HCBS beneficiaries and in the number of new jobs. We focus only on two provisions of the Act — the expanded eligibility to 300% and the requirement for personal care services. It is important to highlight that this is not a mandatory expansion — states have the option to receive enhanced match if they include these provisions, along with the others noted above. But for the purposes of these estimates we assume all states adopt these provisions. Note also that we are not including any effects of other important provisions of the bill, such as provision of respite care or behavioral health support for caregivers.

The estimates make use of data from the American Community Survey (ACS). At a high level, our calculations proceed as follows:

1. We begin with the number of non-institutionalized individuals receiving HCBS by state.

2. We the compute from the ACS the proportional rise in eligibility for HCBS caused by moving from current income standards to 300% FPL in every state.

3. We assume that this proportional rise will apply to receipt of HCBS services as well — that is, we assume that the newly eligible will use HCBS at the same rate as the existing eligible population.

4. We then use analysis by Karen Shen that estimates that adding PCS to a state plan increases use of formal HCBS services by 50%. We then apply that to the 17 states that do not currently have PCS in their state plan.

5. We add these two elements to get total new use of formal HCBS.

6. To get the effect on employment of existing informal caregivers, we use the estimate from Shen that one caregiver becomes employed for every 2.4–3 elderly receiving home care; we conservatively assume 3.

7. Finally, to get direct care jobs created, we use the fact that in 2010 there were 6.2 home health users per FTE home health aide/personal care aide

Our results are shown in Table 1, by state and with national totals.

· The second column shows 2018 HCBS recipients by state.

· The third column shows the percentage increase in eligibility resulting from increasing financial eligibility to 300% of FPL across the nation. For that vast majority of states, which currently have eligibility standards at 222% of poverty, this is roughly 20–25% increase; but for a few states, where standards are much lower currently, this is a much larger increase.

· Column four multiplies the two to show the number of new HCBS users arising from expanded eligibility.

· Column five shows which states do not have PCS as part of their state plans (denoted with a 1) as opposed to already including them (0).

· Column 6 shows the increase in HCBS use from adding PCS to the state plan, using the impact estimate from Shen.

· Column 7 adds columns 4 & 6 together to get the total change in HCBS enrollment.

· Column 8 shows the change in employment among informal caregivers from relieving them of their burden with additional formal care.

· The last column shows the number of direct caregiver jobs created.

Overall, we find that baseline HCBS use rises by 3.2 million persons, which is an 88% rise in HCBS users, if all states apply and receive approval for HCBS expansion. Three quarters of this effect comes from expanding eligibility to 300% FPL; 25% of that arises from increased enrollment in CA alone (since the current standard in CA is 138% of FPL, rather than 222% in most states).

We also estimate that this will create more than 1.1 million new jobs by providing new opportunities to caregivers who face reduced caregiving responsibilities. In addition, another 516,000 new jobs will be created by creating opportunities to provide direct care under expanded HCBS.

Professor of Economics MIT