Should Government Take Over the Nursing Home Business?

Chris Powell


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Nursing home workers in Connecticut long have been essentially state government employees because most patients are technically indigent and their care is financed by state government’s Medicaid program — for nearly $1.2 billion per year, half reimbursed by the federal government.

The euphemism for this is “estate planning.” When people who have assets reach a certain age they are advised to squirrel their assets away where government can’t get at them — reliable family members, trusts, and such — so if someone needs round-the-clock care, he can go on welfare.

It’s a demeaning system and no longer saves much money for the government, and it should be replaced by an expansion of Social Security if the country ever decides it can do without fantastically expensive imperial wars.

But while nursing homes are de-facto state institutions, most of their employees have been paid more like fast-food employees. Like agricultural work, nursing home work is not always easy but it does not require special skills. So labor for nursing homes has been plentiful, mainly women from racial minorities who have limited education, just as agricultural labor has been plentiful, mainly immigrant men, often immigration lawbreakers, of limited education. Thus these workers have little power to gain higher wages and constitute much of the working poor.

Representing agricultural workers, the United Farm Workers union has had limited success, mainly because its constituents are largely transient immigration lawbreakers. But the nursing home workers are not transient and illegal, so their wage prospects are better. In Connecticut, District 1199 of the Service Employees International Union long has been gaining representation at nursing homes and now represents workers at enough homes to cause a big problem, as with the strike it lately has threatened at 39 homes.

The union wants big raises and improvements in benefits and working conditions. Governor Lamont has offered to throw hundreds of millions of dollars at the problem, and with billions in emergency federal largesse behind him, he should be able to satisfy the union for a year or two, though the cost will include raising payments to all nursing homes, not just the unionized ones. This will buy time but it won’t answer the longstanding question about the structure of the industry.

There is a public interest in elevating the working poor, but what is fair compensation for nursing home employees? The market, such as it is with the government buying most of the product, suggests that fair compensation is not high. Buying most of the product, the government has the right and power to set compensation.

So those nursing home employees who are unionized are organized less against their nominal employer, the nursing home operators, than against the government itself.

Maybe determining fair compensation starts with recognizing that as a practical matter there really is no market here — that government controls nearly everything. This implies socializing or nationalizing the system.

Of course especially in Connecticut most nursing home employees would love to become state government employees. Some elected officials might not enjoy losing their intermediaries — the nursing home operators — in assigning responsibility for the industry, just as elected officials wouldn’t enjoy socializing the electric companies and losing wonderful scapegoats. But many Democratic leaders would love adding thousands of nursing home employees to the party’s army of tens of thousands of unionized state and municipal government employees.

Or maybe recognition that there isn’t a market for nursing home care implies the need for government to create a market. Maybe state government could set a uniform per-diem payment for care and issue vouchers to patients or their conservators, with the patients and conservators doing their own shopping and keeping the change if they purchase care for less than the amount of the voucher.

Such a system might provide some incentive to economize in a billion-dollar industry.

In any case, throwing money at the nursing homes may prevent a strike now, but when the emergency federal money runs out, Connecticut will be back in its usual insolvency with an aging population.


Chris Powell is a columnist for the Journal Inquirer in Manchester, Connecticut.