Minimum wage versus Medicaid?

Tens of thousands of Vermont workers do not make enough to support their families. At the same time, home health and personal care agencies that hire many of these low-wage workers can barely keep afloat because of low Medicaid reimbursements.

But underfunded Medicaid should not put the brakes on a long-overdue minimum wage increase.

A recent Public Assets Institute report shows that people earning minimum wage have lost ground over the past 40 years even as costs for essentials, such as housing, childcare, and college have risen substantially. Raising the wage to $15 by 2024 would start to address this disparity.

An increase in the minimum wage would also cost home health agencies, whose budgets depend on Medicaid reimbursement from state contracts, roughly $800,000 next year in new payroll expenses according to the Legislative Joint Fiscal Office. Vermont would pay approximately $360,000 of that cost with the federal government covering the rest. The state’s annual cost could go up to $1.6 million in the future, as the minimum wage increases to $15 over five years.

Raising the minimum wage would likely push up wages for other under-compensated employees at these agencies, making their operating costs even higher. However, the state needs to increase Medicaid reimbursements to these agencies so they can care for older Vermonters and pay their employees a livable wage. As our population ages more people will be needing care, so addressing this problem now is important for the future well-being of Vermonters.

Some legislators are hesitant to support a minimum wage increase because of home health and personal care agencies’ budget concerns. But delaying the minimum wage bill would not fix our underfunded Medicaid system, which desperately needs attention. Instead it would leave more Vermont families struggling to make ends meet.

The state needs to both raise the wage and provide adequate Medicaid reimbursements.