ALBANY – Gov. Andrew M. Cuomo’s signature plan to sharply increase the state’s minimum wage generated pushback Monday from both critics and supporters of the idea because of its expected financial impact on health care providers.
In testimony before lawmakers over the most expensive and complex portions of the state budget, the governor’s top health care advisers found themselves having to add the minimum wage debate to their usual portfolio of Medicaid reimbursement rates and an array of public health issues.
At issue is how nonprofit and public health entities that provide health care, often through contracts with the state, will be able to absorb the higher wage levels. Cuomo wants to raise the minimum wage to $15 per hour, from the current $9.
Sen. Catharine M. Young, R-Olean, chairwoman of the Senate Finance Committee, was the first to raise the matter with state Health Commissioner Dr. Howard A. Zucker, and state Medicaid Director Jason A. Helgerson. Young said that some providers, including nursing homes, will be forced to close if the higher wage rule goes through and the state does not help fund the increased costs for providers.
“How are we going to deal with this issue?” she asked the two Cuomo officials.
Zucker sought to allay concerns, saying the wage increase would be phased in over several years, while Helgerson said a goal of the department is to ensure that health workers are “adequately” paid and that the higher wage would produce a more stable workforce by raising job-retention levels.
Their assurances did not appear to allay lawmakers. Sen. Diane J. Savino, D-Staten Island, called it a “huge concern” that Cuomo’s budget proposal included the wage hike without a corresponding funding increase for nonprofit health providers.
The Healthcare Association of New York State, a trade group whose members include hospitals and nursing homes, estimated that raising the wage to $15 per hour will cost the health industry $2.9 billion in higher annual direct and indirect costs. The group estimated that most of the costs – more than $1.7 billion – would affect home care providers.
In written testimony, Dennis P. Whalen, the group’s president, said that there would be “critical adverse effects on access to care” if Cuomo’s wage plan goes through without a funding increase to help providers cover the costs.
He added that most Medicare reimbursement rates are set by the federal government and that Medicaid managed care premiums do not cover labor costs for providers.
George Gresham, president of Local 1199, United Healthcare Workers East, Service Employees International Union, said his union is pressing to have this year’s budget directly pay for the costs associated with raising the minimum wage for health workers whose salaries are funded by the Medicaid insurance program. “It is important not to listen to fearmongering that seeks to inflate this cost,” he said, “and to bear in mind the savings that will come as the state no longer needs to subsidize assistance programs for people working full time but earning poverty wages.”