Over three-quarters of Americans 50 and older want to age in place, but the necessary home-based workforce is becoming less and less available to meet the demand, according to a new report in Health Affairs by LDI Associate Fellow Amanda Kreider, a Health Economist at Penn, and LDI Executive Director Rachel M. Werner. Their research focused on home- and community-based services (HCBS) funded by Medicaid, the primary payer for long-term services and support. During the period from 1999-2020, the number of people enrolled in Medicaid HCBS programs more than tripled, from 1.10 million to 3.37 million. However, “between 2013 and 2019, the number of home care workers per 100 HCBS participants declined by 11.6 %—and it looks as if the decline continued into 2020,” said Kreider.

A shortage of home care workers—home health aides and personal care aides—produces major consequences. “Care workers help people with basic activities like eating, dressing, and bathing and millions of people experience serious consequences from not having access to that care. They may soil their clothes, go without bathing or showering, go without eating, or stay in bed because they don’t have help. They may have to remain in nursing homes longer than necessary. Family members—most commonly daughters—step in when paid care is available, and there are economic and health consequences for these unpaid caregivers, as well,” Kreider noted. LDI Senior Fellow Mary Naylor, Professor of Gerontology at Penn’s School of Nursing, who was not part of the research team, said, “We cannot continue the status quo.”

A Shift to Home Care

Americans are getting older—the leading edge of the Baby Boom generation is now 77—and that brings an increased need for long-term health care in the U.S. In addition, in what has been termed a “rebalancing,” there’s been a shift in settings where long-term care is provided. “Older adults want to remain in their homes. That’s where they feel safe and secure,” said Naylor. Added Kreider, “While our study didn’t directly address this, COVID-19 affected the perceptions of nursing homes. There’s a real fear based on the high mortality that happened in nursing homes, especially in the early stages of COVID.”

A 1999 Supreme Court decision (Olmstead v. L.C.) set the stage by confirming the right of older adults and people with disabilities to receive services in the least restrictive setting possible. “As a result of that decision and the desire of people to age in place, Medicaid has increasingly paid for long-term care in homes and community-based services. Each state runs its own Medicaid program and states are driving the shift,” Kreider said. In most states, over half of Medicaid spending on long-term care and other support services now goes to home- and community-based services, according to the Kaiser Family Foundation. In Oregon that figure is 83%.

Employee Turnover is a Problem

Many agencies that employ home care aides have problems with labor shortages. “Estimates of turnover vary a lot, but I’ve seen estimates as high as 65% a year,” Kreider said. These workers, who are largely women and people of color, and often immigrants, have a demanding role. “Aides have physically demanding jobs and experience a high rate of injuries. There’s little training to help them manage complex health conditions. Unpredictable schedules are also a barrier to recruitment. But one of the biggest problems is low compensation—averaging about $12.12 an hour—and poor benefits,” Kreider said. Almost one-quarter of home care aides live below the federal poverty line, and over half participate in programs such as the Supplemental Nutrition Assistance Program.

High turnover reduces the quality of care. “Most patients crave a sense of continuity. How can you build trust if a different person shows up each day? Without trust you won’t have positive outcomes,” said Naylor.

Workforce Attrition Due to Schedule Volatility

Turnover is also an issue for home health nurses. A study by LDI Senior Fellow Hummy Song and colleagues found that over 30% of full-time registered nurses and about 25% of licensed practical nurses left their position in a large home health care agency over the course of a year. Increasingly, home health care agencies have been struggling with high rates of turnover, in part because of high levels of schedule volatility. In this industry, it is common for employees to learn of their schedule for the next day only the night before, at which point they would be told whether they will start at, say, 9 a.m. or 1:30 p.m. the next day. “This is an effort to match supply and demand in real time,” said Song, who is an Assistant Professor of Operations, Information, and Decisions at Wharton. Using a new measure of schedule volatility in another study, they concluded that just 30 days of high schedule variability in a year increases the odds a nurse will quit by 20%. “These results suggest that, for full-time nurses, greater predictability and evenness in scheduling could be a valuable lever to mitigate nursing turnover,” wrote the authors.

Possible Systemic Improvements

“Obviously home care workers need better compensation,” said Naylor. ”But they need more than higher wages. We should, as a society, say that these people matter. Home care workers are not seen as part of the larger medical team for a patient. Yet they have very close proximity to the person they’re working with. They know day to day when people change. For instance, yesterday Mr. Smith could walk up the stairs. Today, he can’t even get up to the first step. We should leverage technology to connect these workers to the health care team. They could convey information to a health care system before Mr. Smith falls and breaks a hip.”

Naylor also suggests creating possibilities for upward mobility. “There should be career paths. The home care worker could start with people whose needs are important but not complex. As they become more experienced and gain more training, they might move from, for instance, working with patients who have mild cognitive impairment to those with moderate to severe dementia. This would be associated with an opportunity to earn more as they progress,” she said. 

“Pay greatly hinges on Medicaid policies,” said Kreider. “Medicaid reimbursement rates may act as a cap on wages. I suspect that an increase in reimbursement to agencies would raise wages for workers, but there’s no guarantee that all of the increase would end up with the workers themselves.”

Kreider is optimistic that Medicaid programs could raise reimbursement for home-based services. “There’s some evidence this is already happening. Because of the pandemic, there was an increase in federal matching funds from 2021 until March 2025, and a lot of states did increase Medicaid reimbursement rates—at least temporarily. The question is whether the increase will persist. I think there is inertia—once a state implements an increase, it may be hard to scale back,” Kreider explained.

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