Failure to reverse cuts could cost California billions in enhanced Medicaid funding

Fresno, Calif.—Homecare providers in the National Union of Healthcare Workers (NUHW) joined disability advocates in calling for the state to roll back dangerous cuts to homecare services in light of a federal government opinion that the cuts would violate requirements of the recently passed federal Recovery Act.

“We need the governor and the legislature to restore this funding immediately,” said Flo Furlow, a Fresno homecare provider and elected leader of NUHW. “Not just to protect providers, seniors, and people with disabilities, but to protect billions of dollars in badly-needed federal funding for other healthcare services. We’re standing together in our union to make that happen.”

The Obama administration’s Centers for Medicare and Medicaid Services (CMS) has outlined a position that California’s cuts to state funding for In-Home Supportive Services (IHSS) are out of compliance with the requirements of the federal Recovery Act (known formally as the American Recovery and Reinvestment Act or ARRA) for receiving enhanced Medicaid funding. The Recovery Act prohibits a state from receiving the Act’s additional Medicaid funds if the state increases local governments’ share of the cost of the Medicaid program.

The position, set forth in a memo provided to state lawmakers earlier this week, makes clear that the homecare cuts in next year’s state budget are vulnerable to legal challenge, and that California could lose billions of dollars in enhanced Medicaid funding for a wide variety of healthcare programs between July 1, 2009 and December 31, 2010 if homecare services are not restored to prior levels.

The memo states that, “CMS believes the limitation [on state contributions for personal care services] would violate the ARRA local contribution MOE [Maintenance of Effort requirement],” based on findings that California’s homecare cuts would improperly require county governments to pay a higher share of cost for the IHSS program. While the memo notes that the state could make IHSS cuts without violating the requirements of the Recovery Act by directly reducing homecare provider rates rather than reducing the state share of cost for them, such a policy would literally lock workers into poverty, preventing counties from funding wages and benefits at levels necessary to provide reliable, quality care, even if local governments wanted to increase their own funding of the program. Such a policy would also force consumers, caregivers, and communities to forgo huge amounts of available federal funding.

NUHW leaders and staff were the first to raise the possibility of a legal challenge to proposed IHSS cuts under the Recovery Act’s local contribution Maintenance of Effort requirement months ago, immediately after it was added to the bill by the U.S. Senate.

“It’s obvious that slashing wages and cutting funds that people with disabilities need to live independently is no way to stimulate the economy,” said Frances Gracechild, the Executive Director of Resources for Independent Living, an organization that advocates for quality homecare services. “These cuts shouldn’t have been made in the first place, and lawmakers should reverse them before they do major damage.”

Seniors and people with disabilities depend on homecare services to live independently in their own homes instead of nursing homes, which would cost the state more. It is estimated that the homecare cuts set to take effect on July 1, 2009 would cost California’s economy $219 million in wages and $460 million in additional economic activity each year—not counting the additional billions in federal recovery funds that could be lost.

“We depend on homecare providers to help us live with dignity and independence, but these cuts are threatening to drive their wages so low they can’t provide for their own families,” said John Wilkins, a disability advocate in Fresno. “Advocates and healthcare consumers are proud to stand with homecare workers and their union, NUHW, in stopping these cuts.”

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The National Union of Healthcare Workers is an independent, member-led union, dedicated to improving the lives of healthcare workers and the people they care for. NUHW is building a national movement of caregivers to hold healthcare corporations accountable to the public interest and win affordable, quality healthcare for all.