Addressing the Shortage of Direct Care Workers: Insights from Seven States

Abstract

• Issue: The shortage of direct care workers — like home health aides and personal care aides who assist people needing help with daily tasks — threatens the ability of older adults and younger people with disabilities to remain in their homes and communities.
• Goals: Assess state progress toward strengthening the direct care workforce and identify actions at the federal level that can build on state initiatives.
• Methods: Twenty interviews conducted from September to December 2023 with stakeholders in seven geographically and demographically diverse states. Those interviewed included state officials, provider organizations, community partners, and national aging and disability experts.
• Key Findings: 1) Enhanced federal funds provided through Medicaid during the pandemic catalyzed state policy action to stabilize the workforce, with priority placed on increasing worker wages; 2) state initiatives to widen entry and career paths are underway but will take time to realize; 3) investing in and professionalizing the direct care workforce is integral to worker recruitment and retention; and 4) federal action can augment state efforts through additional resources, recognition of direct care jobs in federal workforce policy, standardized data collection, and a national evaluation of state workforce initiatives.
• Conclusion: Strengthening the direct care workforce requires sustained federal and state leadership, collaboration, and resources.

Introduction

Longstanding shortages in the direct care workforce are making it increasingly difficult for older adults and younger people with disabilities to live at home. These shortages, exacerbated by the COVID-19 pandemic, have been driven by low wages, high turnover and low retention rates, and recruitment challenges.

Direct care workers, including personal care aides, home health aides, and nursing assistants, provide essential services to individuals with physical, cognitive, and intellectual or developmental disabilities as well as to older adults at home, in nursing facilities, and in other residential settings. These workers assist with a wide range of tasks, including eating and bathing, grocery shopping and housekeeping, and health care support, such as medication management and wound care. Direct support professionals, a distinct part of the direct care workforce, also provide habilitation services, employment assistance, and other supports to people with intellectual and developmental disabilities.

The direct care sector is projected to add over 1 million new jobs between 2021 and 2031, more than any other occupation in the United States.¹ However, mounting workforce challenges, a growing population of older adults, and increased use of home-based care, will make it difficult to meet the demand. Recent analysis by the National Center for Health Workforce Analysis shows the demand for direct care workers is projected to increase by 48 percent for nursing assistants, 43 percent for personal care aides, and 42 percent for home health aides between 2020 and 2035.²

State Medicaid programs, the primary payer for home and community-based services (HCBS), recognize this and have prioritized addressing these issues.³ Through the American Rescue Plan Act (ARPA), states are able to use temporary federal flexibility and enhanced funding until March 31, 2025, to stabilize their direct care workforces.⁴ But some flexibilities have ended, and sustaining these efforts will be difficult as extra federal funding winds down.

This brief assesses state efforts to strengthen the direct care workforce to inform federal and state policymakers on what policies and initiatives are needed to continue progress. Between September and December 2023, we conducted 20 structured interviews with stakeholders in seven states, including state administration and agency officials, national aging and disability experts, and executive leadership in provider organizations, nonprofit agencies, and other community partner organizations, to learn about states’ experiences in addressing direct care workforce shortages. We then discuss actions that can be taken at the federal level to build on state initiatives. (A related Commonwealth Fund blog post highlights the challenges and priorities of direct care workers.⁵)

Key Findings

Enhanced Federal Funds: A Catalyst for Policy Action

Federal funds helped stabilize the direct care workforce. Enhanced federal funding during the pandemic enabled all states to take action to stabilize the direct care workforce.⁶ ARPA provided a one-year, 10-percentage-point increase in the federal Medicaid matching rate for HCBS for approved activities. These activities could take place between April 1, 2021, and March 31, 2022, but states have until March 31, 2025, to spend funds. Nationally, 48 states reported raising payment rates and 41 states offered incentive payments to workers.⁷ Median hourly wages for direct care workers increased because of state and federal Medicaid pandemic funding, but they remain low overall.⁸ A recent Assistant Secretary for Planning and Evaluation analysis found that in all states, median wages of home health and personal care aides were lower than wages of other entry-level jobs, such as retail salespersons and customer service representatives, by an average of $3.15/hour in 2019.⁹ Wages vary widely across states and between metropolitan and nonmetropolitan areas. For example, in 2022, the median hourly wage for home health and personal care aides was $14.51, ranging from $9.46 per hour in Louisiana to $18.25 per hour in Washington State.¹⁰ The ASPE study also found that only about half of direct care workers have access to health insurance through their employer or union.¹¹

In the states where we conducted interviews, respondents said that state legislatures authorized the use of the ARPA funds to increase HCBS provider payment rates and base wages for direct care workers. Incentive and retention bonuses were swiftly implemented alongside the wage increases to make direct care jobs more competitive with other industries. Some states in our study introduced rural pay differentials to account for unreimbursed transportation expenses. Despite these measures, direct care workers still face challenges, including inadequate wages and benefits, as well as food insecurity and limited access to housing, health insurance, and childcare assistance. Interviewees stress the need for strategies to prevent a “benefits cliff,” which is the loss of access to public benefits, including Medicaid and food assistance, as earnings increase.

ARPA funding provided an infrastructure boost. ARPA funds allowed states to begin investing in the infrastructure needed for workforce recruitment and retainment initiatives, such as marketing campaigns, training and career development programs, worker surveys, and payment rate studies. Costs include designating staff, engaging consultants, and obtaining research and technical expertise. States are also in the early stages of developing data analytics to define and quantify direct care work, assess workforce sufficiency, and build an evidence base on the impact of policy changes. State workforce development leaders are cognizant of the need to document the value of federal and state investments for enhancing worker recruitment and retention. But with states facing budget constraints and seeking to minimize the burden of collecting data on providers, additional federal resources and time will likely be needed to bring these efforts to fruition.

Leadership undertook collaborative workforce strategies. State leadership is crucial for prioritizing and allocating funding for workforce initiatives. ARPA funding provided impetus to state legislatures to strengthen and accelerate efforts to enhance workforce recruitment and retention. Administrative leadership may be lodged within state departments of health and human services or within broader state workforce efforts typically housed in labor or commerce departments.

Leadership also plays a key role in addressing challenges that can arise when integrating direct care workers into broader workforce development efforts that focus on higher-paying health care professionals. Other challenges include bridging workforce policies across state agencies that historically have different objectives specific to the population served. State officials we interviewed stressed that aligning job titles, training requirements, and credentialing across agencies involves intensive collaboration with Medicaid and agencies focused on intellectual and developmental disabilities and behavioral health.

Worker involvement was considered crucial. Interviewees unanimously stressed the value of involving direct care workers in strategy development and implementation. For example, establishing boards or councils that include direct care workers raises the profile and recognition of this workforce with the legislature, state agencies, health care community, and the public. Their participation can also provide a realistic perspective on how state policies can impact workers. Offering direct care worker members training sessions on leadership, storytelling, and policy skills, as well as compensation for time and expenses related to this service, supports effective participation in advisory groups.

Entry and Career Pathways Are Expanding but Take Time to Realize

Broadening entry and career pathways. States are broadening direct care worker recruitment efforts to address unmet needs in their community, including targeting high school and college students, new immigrants to the United States, individuals nearing retirement, and retirees who are interested in pursuing an “encore” career. Recruitment efforts also encompass family members and extended relatives of older adults and people with disabilities, individuals with caregiving experience, and people with disabilities. However, the lack of readily accessible information on job characteristics creates recruitment challenges. To boost recruitment, states have employed marketing campaigns featuring worker stories, videos, job preview sites, and direct links to job hubs. These recruitment efforts extend beyond licensed health care professionals, such as nurses and certified nursing aides, to include personal care aides.

Enhancing recognition of direct care workers. To elevate the status of the profession, some state initiatives aim to establish the role and value of direct care workers as key members of the health care community. These efforts educate policymakers, the provider community, and the public on the complex, demanding, and critical work performed by direct care workers. Interviewees stressed that raising awareness goes hand in hand with addressing the low wages, lack of benefits, and discriminatory practices that have plagued this workforce, which is disproportionately composed of women, people of color, and immigrants. State administrative staff noted that it will take time and resources to build the infrastructure needed to collect data from provider agencies to increase transparency about, and accountability for, what workers are paid.

Professionalizing the Workforce Is Integral to Worker Recruitment and Retention

Standardizing job titles, training, and support for direct care workers. Titles and training standards vary widely based on the services provided under different programs within and across states. States are working to establish common titles and to standardize training by building on core competency requirements from the Centers for Medicare and Medicaid Services (CMS), which aim to simplify new employee onboarding activities and align training for those working with various populations receiving HCBS.¹² States partnering with managed care organizations (MCOs) to deliver long-term care are using contract requirements to advance workforce initiatives. For example, states can use MCO contracts to require MCOs to have a workforce development expert tasked with providing direct assistance to contracted provider networks on workforce recruitment and retention issues. The state can use MCO workforce plans to foster collaboration and build a coordinated approach to achieve workforce goals and establish consistent training standards and uniform career ladders. Collaboration across workforce development teams within managed care plans helps establish consistent training standards. Provider agency mentoring programs that provide peer and supervisory support are also assisting workers. Some states also leverage federal “Money Follows the Person” grant funding to contract with an entity to provide orientation, training, and support for workers and provider agencies.¹³ Training encompasses not only care delivery but also business skills for developing and growing a provider organization.

State officials acknowledge that ensuring accessible recruitment and training materials for people with disabilities or for whom English is a second language is a longer-term goal. Long-term care consumer advocates also stressed workers’ need for emotional support services, such as employee assistance programs, and counseling, owing to the intense and stressful nature of their work. While their training requirements often differ, family members — a valuable and significant share of the workforce, especially in rural areas — require payment and support as well.

Progressive certifications and credential portability. By developing career and education pathways, some states are creating opportunities for workers to advance from entry-level positions to more advanced roles. For example, some are working with community colleges to develop a continuing education curriculum technical certificate that can be a springboard to earning an associate’s or bachelor’s degree in social work. Additionally, some states are implementing learning management systems in collaboration with universities, offering modules for specialization, such as in Alzheimer’s disease and dementia, with additional pay. Portable credentials enable workers to demonstrate their training and experience across jobs, employers, and settings. But developing these systems requires building an administrative infrastructure to set training standards and track worker credentials, as well as gaining employer buy-in to recognize worker credentials across home care, hospital, or nursing home settings.

Facilitating worker–client connections. Stakeholders recognize the importance of facilitating connections between direct care workers and clients. Beyond establishing registries, some states are creating job hubs where workers input credentials, preferences, and tasks to facilitate matching with clients.¹⁴ Consumers highlight the need for liaisons to help navigate this process, especially in programs that allow clients or Medicaid enrollees to directly hire workers, including family members, to provide care. Direct care workers in home settings often require help in developing business acumen for managing client rosters and complying with reporting requirements. Several interviewees also noted technological challenges for providers and workers, including continuing issues with Medicaid electronic visit verification of personal care and home health services, particularly in rural areas.

How Federal Policymakers Can Strengthen the Direct Care Workforce

Extending federal funding and flexibilities. The ARPA funding helped state efforts to address the direct care worker shortage by facilitating increased payments to workers, development of training and career pathways, and marketing and recruitment campaigns. Interviewees stressed the importance of taking these steps to enhance recruitment and reduce turnover. The Administration for Community Living (ACL) has recently launched the Direct Care Workforce Capacity Building Center to provide technical assistance to states and service providers and facilitate collaboration with stakeholders to improve the recruitment, retention, training, and professional development of direct care workers.¹⁵

With ARPA funds expiring in March 2025, states are likely to require alternative funding sources to sustain ongoing efforts. Congress could consider additional legislation, such as the HCBS Relief Act of 2023, to fund Medicaid to stabilize HCBS service delivery networks and address workforce needs.¹⁶ The federal government also gave state Medicaid programs broad flexibility to use HCBS programs to respond to the pandemic’s impact on beneficiaries, including by paying family caregivers for providing services.¹⁷ Although many pandemic flexibilities have expired, CMS support of state decisions to expand the pool of direct care workers would build on this experience.¹⁸

The federal government can support and help coordinate the ancillary services, such as home delivery meals, that direct care workers use to meet their clients’ needs. Federal policymakers can also lead cross-agency efforts to address the “benefits cliff” — including by aligning and increasing eligibility criteria for programs such as food and nutrition, childcare, and housing — to enable low-income families to meet basic needs as workers’ earnings increase. Additionally, federal policies can be targeted to support the recruitment of new immigrants to expand the direct care workforce.

Recognition and support for direct care workers. Elevating public and policy recognition of direct care workers is crucial. Direct care workers often feel unrecognized, underappreciated, and underpaid for their work.¹⁹ Increasing wages, benefits, and career opportunities for direct care workers is a necessary acknowledgement of their valuable role in the health care workforce.

Investment in national evaluations and standardized data. A unified national evaluation drawing on state experiences with implementing various ARPA-funded recruitment and training initiatives can provide evidence to guide future efforts. Standardizing workforce data collection, including reassessment of occupational codes used by federal agencies, is necessary to accurately define direct care workers. This should include establishing a code for direct support professionals. In contrast to certified nursing aides and home health aides, there are no federal training requirements for categories of home care workers, such as personal care aides. Federal guidance on competency can help standardize worker training requirements. Lack of common titles and training standards hinders coordination of state policy and planning and leads to confusion among workers and the public. In the absence of federal guidance, states are moving forward to enhance data on the direct care workforce, leveraging registries, provider surveys, and other administrative information. Building on these efforts to collect robust, high-quality, and timely data is necessary to inform workforce planning and policy development.

Strengthening home- and community-based services. Proposed federal rules aim to address HCBS workforce shortages and increase transparency in payment rates.²⁰ While this policy direction was generally supported by state interviewees, concerns persist about the capacity of states and providers to meet new reporting requirements without additional funding and technical support. CMS could consider the potential impacts on access to HCBS and their quality if new requirements lead providers to leave the field. Additionally, federal strategies to address health care worker shortages should be examined comprehensively to assess the impact on the direct care workforce.

Conclusion

The enhanced federal funds provided through Medicaid during the pandemic enabled states to move forward with immediate and long-term actions to stabilize the direct care workforce. States quickly utilized the American Rescue Plan Act authorities to implement a wide range of strategies to address shortages in direct care workers. As the additional federal funding expires, building on the momentum of these efforts will require additional investment. States prioritized increasing worker wages, but additional federal resources will be necessary to continue progress on worker compensation given state budget constraints. Continued investment in the work being undertaken by the Administration on Community Living, in collaboration with other federal agencies, to develop tools, promising practices and training resources can support state efforts to improve direct care worker recruitment and retention. Additionally, recognition of direct care jobs in federal workforce policy, standardized data collection, and a national evaluation of state workforce initiatives would augment state efforts. Strengthening the direct care workforce requires sustained federal and state leadership, collaboration, and resources and is essential to addressing the growing demand for long-term services and supports as the population ages.