Addressing the Direct Care Workforce Shortage

Executive Summary

For over two decades, the United States has had a long-standing shortage of direct care workers. These workers include personal care aides, certified nursing assistants, home health aides, residential care aides, psychiatric aides, and other occupations. This worker shortage is straining the health care system, harming care access and quality for the millions of adults and children in the United States with long-term care needs, and contributing to potentially avoidable federal and state spending.

Federal agencies have warned of the urgent need to address the problem soon, as the aging of the baby boomers will only exacerbate it. Although the number of direct care workers more than doubled from 2.2 million in 2000 to 5.1 million in 2022, the supply of direct care workers will fall short of the demand associated with 8.9 million projected job openings from 2022-2032. The COVID-19 pandemic widened that gap, as many health care workers left their employment—due to such factors as risk of infection or lack of child care—and many did not return. The overall U.S. labor force has rebounded since the beginning of the public health emergency (PHE) in February 2020, but direct care employers still struggle to recruit and retain workers.

Fifty-four percent of nursing homes surveyed in 2023 had to limit new patient admissions, while home health care providers said they turned away over 25% of referred patients because of staffing shortages. Accordingly, hospitals and health systems report increased delays in discharging patients for post-acute care. For example, from 2019-2022, the average length-of-stay increased 20% for those hospital patients being discharged to skilled nursing facilities and almost 13% for those being discharged to home health agencies. These delays not only increase the strain on hospital capacity and resources, but they are also associated with poor health outcomes for patients, including increased risk of mortality, hospital-acquired infections, depression, and reductions in patients’ mobility and activities of daily living (ADLs).

The number of people who need long-term services and supports (LTSS) is a helpful indicator of national reliance on, and demand for, direct care workers. The most recently available data indicates that almost 23 million adults in the United States reported significant difficulty with at least one of six domains of functioning—including seeing, hearing, mobility, communication, cognition, or self-care—in 2019. Among those adults, close to half, or 10.2 million, were age 65 or older. Many children with disabilities or functional limitations also rely on LTSS. From 2019-2020, about 3.6 million children experienced functional limitations.

Direct care workers help address these needs by providing hands-on assistance with daily tasks and other LTSS in a variety of care settings. Although Medicaid is the primary payer for LTSS delivered by direct care workers, Medicare and private payers (including private long-term care insurance and out-of-pocket spending) also finance these services. Total LTSS spending in the United States reached $467.4 billion in 2021, the most recent year for which data were available. Because many individuals prefer to receive care in their homes from family members or friends, unpaid caregivers play a major role in alleviating demand for paid direct care workers. According to recent estimates, about 38 million caregivers in 2021 were unpaid, and the estimated economic value of their care reached approximately $600 billion.

There is increasing bipartisan interest in addressing the direct care workforce shortage. Members of Congress across the aisle have recently held hearings, solicited stakeholder feedback, and introduced bipartisan legislation to resolve this crisis. The Biden administration and Congress have also taken important but limited steps to help expand the direct care workforce. However, further comprehensive federal policy reforms are necessary to address the long-standing, deeply rooted challenges to recruiting and retaining direct care workers.

BPC has an extensive track record of working to improve care for individuals with chronic conditions and has released several reports with federal policy recommendations to improve access to LTSS for older adults and individuals with disabilities. In recent years, BPC produced a mounting body of work with federal policy solutions to address worsening shortages of health care providers, including behavioral health, nursing, and rural health providers. In this report, BPC builds on that prior work to address the shortage of direct care workers across institutional, home, and community-based care settings.

Through research, interviews with stakeholders and federal policy experts, and a private roundtable discussion, BPC identified key challenges to expanding the direct care workforce and federal policy reforms to address those challenges.

Specifically, we identified three major challenges to recruiting and retaining direct care workers:

1. work environments that do not effectively support workers’ needs and contribute to feeling undervalued, largely due to inadequate and stagnant wages and benefits, limited access to training, and a lack of career lattices for professional advancement;
2. domestic workforce programs that predominantly target more medicalized or credentialed professions and an immigration system that is not structured to ensure adequate visa and green card pathways exist for foreign-born workers who desire to help fill unmet demand for direct care workers; and
3. the absence of standardized data collection and publicly available data on the volume, stability, compensation, and profile of the direct care workforce to better measure the effects of federal policy reforms to expand the workforce and inform evidence-based

Addressing these challenges is critical to not only ensuring a robust direct care workforce, but also to promoting gender and racial equity, as the current workforce is comprised disproportionately of women (86%), people of color (60%), and immigrants (25%).21 Comprehensive federal policy reforms can help to stabilize the direct care workforce and close the care gap for those with LTSS needs. This moment also presents an important opportunity for federal policymakers to improve care access and quality while making progress in fully integrating individuals with disabilities into the community, as required by the Supreme Court in Olmstead v. L.C.22,

This report includes bipartisan legislative and administrative federal policy solutions to (1) promote retention of direct care workers through reforms that encourage more supportive work environments, including assisting unpaid caregivers who incur significant financial burdens while relieving pressure on the paid workforce; (2) increase the number of workers through domestic and immigration policy reforms; and (3) improve standardized data collection and publicly available data on the direct care workforce to measure the effects of these efforts and inform evidence-based policymaking.

Direct care workers are critical to ongoing federal and state efforts to promote high-value care for individuals with complex needs, and the shortage of these workers is likely to have negative effects on health care spending over the long term. Undervaluing and underinvestment in the direct care workforce through the years has led to the need for significant federal policy reforms.

Some of the reforms will now require upfront federal and state investment to achieve potential long-term cost-savings—such as savings from better health outcomes, fewer avoidable hospitalizations, or workers’ reduced reliance on public benefits—and tax revenue from new workers entering the labor force. Federal policymakers should aim to offset the federal costs associated with the policy recommendations in this report to achieve budget neutrality. Some of our recommendations, such as a caregiver tax credit for LTSS-related expenses (which has a budgetary cost that is well above those associated with the other recommendations), can be adapted as necessary to match the available offsets by modifying design features, such as qualifying criteria for the tax credit or that of their care recipients.