Editorial: Heartless greed

New York has a desperate shortage of home care workers to care for the sick, disabled and infirm. Faced with this dire situation, state legislators and Gov. Kathy Hochul allocated $7.7 billion to the state budget for pay increases to retain and attract these key workers.

But now it looks like hundreds of millions of dollars of that money are going to insurance companies who are keeping it for themselves.

It’s a level of greed and opportunism in the face of a crisis that should shake the sensibilities of the governor and the legislature. And Attorney General Letitia James should consider whether this should be a civil or criminal case. Even if it doesn’t turn criminal, it’s just as offensive a misuse of public funds as the rampant fraud we saw in the false claims for unemployment benefits at the start of the COVID-19 pandemic.

As the Times Union’s Rachel Silberstein reports, the money should allow for minimum wage increases of $2 an hour this year and $1 an hour next year. The increases were supposed to start on October 1st.

However, some private insurance companies offer only 20 to 50 cents more reimbursement rates per hour in negotiations with home care providers. The New York State Association of Health Care Providers says that as of last week, the vast majority of home care providers have not reported any insurance companies even speaking to them about increasing reimbursement rates. Some even want to lower prices.

The result would then be even worse than if the state had not offered any new money at all. Since providers would have to pay more per hour but not be paid in full by insurance companies, they would likely have to cut staff and pay overtime and turn away customers who are insured by companies that don’t cover the wage increases.

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That certainly sounds immoral and may not be legal. The state Department of Health and Human Services says federal rules about how much money premium insurers and managed care organizations must spend on direct care don’t allow them to keep state funds. The department intends to reinforce this message.

Heads of state should deliver a message of their own – that preventing these public funds from getting to workers is a monstrous breach of trust. It’s not just about pay, it’s about the health of an industry on which so many vulnerable people depend. Insurance companies not only take advantage of providers, they thwart an important public health initiative.

Capital Region lawmakers — Sen. Neil Breslin, D-Delmar, who chairs the Senate Insurance Committee, and Reps. John T. McDonald III, D-Cohoes, and Phil Steck, D-Colonie, both members of the Assembly’s Insurance Committee, should do call on their respective committees to convene and demand that insurance executives come to Albany and explain themselves. And they should work with the Hochul government to develop new legislation, if necessary, to force insurers to pass the money on and pay retroactively for anything they didn’t pay. And a penalty, if possible, could help take the point home.

In the meantime, we offer the insurance industry some simple, clear and non-bureaucratic advice: do the right thing.