Home care worker pay mandate divides Alaska lawmakers over rural access

The Alaska Senate Finance Committee heard testimony Tuesday on legislation that would create a Home Care Employment Standards Advisory Board and require home care agencies to spend 80 percent of Medicaid personal care service rates on direct worker compensation over four years.

House Bill 96 would establish the advisory board to study workforce conditions and implement the wage allocation requirement. The bill comes as Alaska faces growing need for home care workers to serve an aging population. Disagreement centers on whether the mandate would help or hurt rural service access.

Jenn Kimball, executive director of the Alaska Association for Personal Care Supports, told the committee that providers support raising caregiver wages and creating the advisory board in Section 1 of the bill. She warned that Section 2's fixed wage requirements imposed before modernizing the system could backfire. Agencies face substantial administrative costs required by Medicaid regulations that the 80 percent threshold does not account for, she said.

"Without meaningful modernization efforts and reductions in administrative burden first, these requirements may ultimately produce the opposite outcome of what everyone in this room wants," Kimball said. "And nowhere is that risk greater than in rural Alaska."

Rural providers already struggle with travel costs and limited workforce availability, Kimball said. When the state cut personal care rates in 2019, agencies responded with wait lists and service reductions in rural areas.

Alexis Rodich, state director for the Caregivers Union representing more than 60,000 direct care workers in Alaska, Washington and Montana, countered that the 80 percent allocation is not a specific wage requirement but a guardrail to ensure fair compensation. Alaska's consumer-directed model, where clients recruit and manage their own caregivers, means agencies have far lower overhead than traditional models, she said.

"Agencies do not need to be in every single community that they are providing services," Rodich said. "However, the direct care workers themselves do need to be in those communities and often have to bear the cost of increased gas prices, heating oil, etc."

Rodich pointed to safeguards in the bill, including hardship exemptions for small agencies and a four-year implementation timeline. The advisory board would have years to assess whether rates are adequate before the 80 percent requirement takes effect, she said.

Tony Newman, director of the Division of Senior and Disability Services at the Alaska Department of Health, told lawmakers that a Guidehouse rate study found personal care agencies need a 32 percent rate increase. But the federal requirement that originally prompted the bill has been rescinded, making the 80 percent mandate a state policy choice rather than a federal obligation, he said.