Feds okay pay cuts for healthcare workers

The state of California has received permission from the federal government to cut wages of home healthcare workers without fear of losing federal stimulus dollars.

The ruling comes as a victory for the Schwarzenegger administration, and a defeat for the Service Employees International Union, which represents thousands of home healthcare workers and which had sought federal intervention to stop the cuts.

The official ruling Wednesday is a reversal from preliminary indications from the Obama Administration that the state would either have to reverse the pay cuts approved in February or risk losing billions in federal stimulus money.

“We had a terrific meeting with Secretary Sebelius about some of the confusions there were regarding the economic stimulus money and those confusions were cleared up this morning,” Schwarzenegger said. “We are very happy to report that they will bring to California the billions of dollars that were promised through the economic stimulus package.”

“It appears that these provisions of the State Medicaid plan, which remain in force, are consistent with the change in California State law,” stated a letter from Charlene Frizzera, acting administrator for the Centers of Medicare & Medicaid Services.

Originally, SEIU said they had a ruling from the Obama administration saying that the state’s cuts to home healthcare workers could put $6.8 billion in federal stimulus dollars in jeopardy.

“The California arguments do not appear to be supportable,” claimed a letter from Daniel Aibel, an attorney with the Centers for Medicare and Medicaid Services.

Schwarzenegger reacted angrily to the memo, and took the matter directly to Sebelius this week. She quickly overruled the opinion from Aibel, and ruled that California’s budget moves earlier this year would not put that stimulus money at risk.

Cuts in home healthcare worker pay were part of the budget solution passed by Gov. Schwarzenegger and legislative leaders in February. As part of his May budget revision, Schwarzenegger has proposed further cuts for in-home support workers. The Legislature cut IHSS worker pay by $2 per hour, lowering wages from $12.10 to $10.10 per hour. The cuts saved the state an estimated $74 million.

The governor has proposed further cutting home service worker pay to $8 per hour in his latest budget. The latest reductions would save the state an estimated $114 million.