By Kevin Caufield
and Shannon Crawley-Serpette
Doris Phelps and some of her friends at Putnam County Community Center admittedly don’t know much about how the Patient Protection and Affordable Care Act will impact them.
But several of the seniors at the PCCC in Standard are hoping the new health care law doesn’t affect their Medicare coverage.
“I’m really happy with Medicare,” said Phelps, an 87-year-old Tonica resident. “I keep hearing it’s going to be bad on Medicare, but I don’t know. I’ll bet you’ll find out very few of us (the seniors who visit the community center in Standard) knows much about it.”
The Affordable Care Act makes bold promises: Health care for the needy, lower prices through a government-regulated market and improved quality. But as the new law slowly trickles into existence, many are only now discovering the impact it will have on their lives.
Medicare benefits packages and the enrollment process will not change. Those who qualify still will sign up at Medicare.gov. Open enrollment starts Oct. 15 and closes Dec. 7, while enrollment for health insurance exchanges will launch Oct. 1 for people not eligible for Medicare.
But seniors on Medicare should expect cost increases and a decline in doctors, nursing homes and home health agencies willing to accept their health plans as a result of the ACA, according to the Centers for Medicare and Medicaid Services. CMMS is the U.S. federal agency which administers Medicare, Medicaid and the State Children’s Health Insurance Program.
About $716 billion in Medicare funding will be cut during the next decade to pay for other aspects of the ACA law that are available only to those not enrolled in Medicare. These cuts mostly target payment formulas for hospitals, nursing homes, home health agencies, hospice agencies and Medicare Advantage plans.
The direct impact of Medicare funding cuts will cause an estimated 15 percent decrease in the number of hospitals, nursing homes and home health agencies willing to accept Medicare patients, according to CMMS. By 2050, the percentage climbs to 40 percent, which means nearly half of today’s current doctors and medical facilities that accept Medicare recipients will no longer do so.
However, several local nursing home administrators such as Mendota Lutheran Home’s Jon Ragsdale are saying it’s still too early to forecast exactly how or if the ACA law will impact seniors.
Ragsdale said Medicare beds are a nursing home’s “bread and butter” because payments are timely and the charged prices come close to meeting a home’s costs to provide health services. Given the popularity of the program, he doubts there will be any drop-off in Medicare clientele.
Instead, Ragsdale said he is much more concerned about Medicaid being expanded under the ACA. In one year, the home lost $1 million due to Medicaid contractual allowance so if the program is expanded, it could cause small nursing homes major financial trouble.
“We don’t expect to feel any effects until 2015 so we’re waiting,” he said.
Phelps worked for 37 years as an administrative assistant at Westclox after her fiancé was killed 23 days after D-Day during World War II,
She has tried her best to provide for herself. For 20 years, Phelps bought supplemental health insurance for added protection but had to cancel recently once the program’s annual bill reached $5,000.
The following year, Phelps fell and broke her hip. She said the combination of her fall with a sciatic nerve problem and macular degeneration means she can’t afford to have Medicare costs go up.
“I just hope it doesn’t get any more expensive,” she said. “Everything is getting more expensive.”
The U.S. Congressional Budget Office and CMMS reports show several cost increases on the horizon.
Between now and 2017, Medicare Part B monthly premiums are expected to increase to $128.20 with Part B deductibles reaching $180. A seniors’ Medicare hospital deductible will increase from $1,156 to $1,336, with co-insurance climbing from $289 to $334. For seniors who remain in the hospital beyond 90 days, the per-diem co-insurance costs are estimated to increase from $592 to $668 by 2017.
Many people differ on Medicare reform. Industry experts say the reforms within the ACA will lead to less access to health care due to fewer doctors and health care facilities willing to accept Medicare participants. Higher administrative costs for implementing new Medicare reforms combined with premium and co-insurance rate hikes will hurt seniors already on a fixed income.
But despite the anticipated financial burdens, some seniors such as Diane Rivkin of Granville think the new law is a step in the right direction.
Rivkin, who worked in a nursing home, said she is especially pleased that people with pre-existing conditions will now be able to purchase health insurance. Although she does complain the Obama administration didn’t do a very good job of explaining the new law.
“I don’t think it went far enough,” she said. “I would actually like to see socialized medicine.”
Did You Know?
The Patient Protection and Affordable Care Act implemented 20 new tax and fee increases. Below are taxes and penalties that already have been implemented
Effective in 2010:
1. Excise tax on charitable hospitals — This will cost hospitals $50,000 if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by the Department of Health and Human Services. (Bill: PPACA; Page: 1,961-1,971)
2. Codification of the “economic substance doctrine” — This provision allows the IRS to disallow legal tax deductions and other legal tax-minimizing plans if IRS deems the action lacks “substance” and is merely intended to reduce taxes owed. Estimates say this will hike taxes by $4.5 billion. (Bill: Reconciliation Act; Page: 108-113)
3. “Black liquor” tax — A tax on a type of bio-fuel. It is expected to cost the biofuel industry $23.6 billion. (Bill: Reconciliation Act; Page: 105)
4. Tax on innovator drug companies — An estimated $2.3 billion annual tax on the industry imposed relative to share of sales made that year. (Bill: PPACA; Page: 1,971-1,980)
5. Blue Cross/Blue Shield tax — The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. It is expected to cost $400 million. (Bill: PPACA; Page: 2,004)
6. Tax on indoor tanning services — New 10 percent excise tax on Americans using indoor tanning salons. (Bill: PPACA; Page: 2,397-2,399)
Effective in 2011:
7. Medicine cabinet tax — Americans no longer able to use health savings accounts (HSA), flexible spending accounts (FSA), or health reimbursement accounts (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). (Bill: PPACA; Page: 1,957-1,959)
8. HSA withdrawal tax — Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. (Bill: PPACA; Page: 1,959)
Effective in 2012:
9. Employer reporting of insurance on W-2 — A possible preamble to taxing health benefits on individual tax returns. (Bill: PPACA; Page: 1,957)
- Look tomorrow for the list of current and future tax increases
Tomorrow: The employer pinch