Obamacare: Bad for Rural America
Medicare Advantage Cuts. The Congressional Budget Office (CBO) estimated[i] that provisions in the health care takeover[ii] will cut a total of $202.3 billion from Medicare Advantage plans that provide a range of health care options to seniors. These harmful cuts could result in Medicare Advantage plans moving out of rural areas, limiting beneficiary choice and causing millions of seniors to lose their current coverage and the extra benefits Medicare Advantage plans provide.
According to former Clinton Administration official Ken Thorpe, while every senior in rural areas had access to a Medicare Advantage plan in 2007, only one in four rural beneficiaries had a choice of plans in 1999[iii]—and the significant cuts could return rural seniors to the days when the only option is a one-size-fits-all government plan.
Rural Hospitals Could Suffer. CBO estimates that the health care takeover will result in $22.1 billion in cuts in Medicare disproportionate share hospital (DSH) payments and an additional $18.5 billion in Medicaid DSH reductions.[iv] These reductions could inflict more significant harm on rural hospitals in States where Medicaid programs cover a low percentage of costs to care for the uninsured, as well as States where DSH payment levels are already below the national average.
Impact on Imaging Facilities. According to CBO, the health care takeover will save $2.3 billion by increasing the presumed utilization rate for certain imaging equipment from 50 percent to 75 percent.[v] Particularly for rural hospitals and clinics where imaging equipment might be used much less frequently than the legislation presumes, these savings could have a disproportionate impact on access to services.
Tax Increases. The health care takeover raises the Medicare payroll tax by a total of $210.2 billion—leveling new taxes on many family farms and other small businesses that serve as the engine of new job creation.[vi] Combined with additional taxes of up to $2,000 per full-time employee for firms that cannot afford to pay for their workers’ health plan premiums, these tax increases on small businesses represent a “double whammy” on American job growth in an already struggling economy.
Medicare Reductions. The health care takeover establishes a new board of unelected bureaucrats empowered to make binding recommendations on cost reductions within Medicare. There is nothing to prohibit this board of federal bureaucrats from reducing—or even eliminating entirely—any temporary payment increases for rural providers, given its authority to re-write Medicare law and regulations in a way that will curb federal costs. For these reasons, CBO notes that these and other Medicare reductions “might be difficult to sustain over time,” and could “reduce access to care or diminish the quality of care” for patients.[vii]
[i] Congressional Budget Office analysis of H.R. 4872, March 20, 2010, http://cbo.gov/ftpdocs/113xx/doc11379/Manager%27sAmendmenttoReconciliationProposal.pdf.
[ii] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.
[iii] Ken Thorpe and Adam Atherly, “The Impact of Reduced Medicare Advantage Funding on Beneficiaries,” April 2007, http://www.bcbs.com/issues/medicare/background/Medicare-Advantage.pdf.
[iv] CBO analysis of H.R. 4872.
[v] Ibid.
[vi] Joint Committee on Taxation analysis of substitute amendment to H.R. 4872 in concert with H.R. 3590, March 18, 2010, http://jct.gov/publications.html?func=startdown&id=3671.
[vii] Congressional Budget Office analysis of H.R. 3590, December 19, 2009, http://cbo.gov/ftpdocs/108xx/doc10868/12-19-Reid_Letter_Managers_Correction_Noted.pdf.