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Election-driven news and views . . . by Jim Geraghty.

Why Is Obama Squeezing the Home Health-Service Industry?



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This is one of those mornings where I want to post the whole Morning Jolt as soon as it’s done. But it’s better to subscribe, so you’ll get the whole package faster.

Why is the Obama Administration Squeezing the Home Health-Service Industry?

A couple of nights ago, Jim Angle of Fox News pointed out a largely unnoticed aspect of Obamacare: HHS Kathleen Sebelius’s decision to  cut the maximum amount she could from Medicare’s payments for home health-care services.

Home health-care services are when a professional from a Medicare-certified home health agency comes to an elderly person’s house and provides nursing care, physical therapy, or speech-language pathology services.

Sebelius cut the maximum permitted by law, 3.5 percent, and declared HHS would do the same for the next three years.

As Angle’s report: noted, “The cuts were deep enough that officials offered a damaging prediction of the impact saying, it was estimated that approximately 40 percent of providers would have negative margins.” 

“Negative margins” is another term for losing money. And businesses that lose money either go kaput or lay off workers. Forty percent of the firms in the industry adds up to roughly a half-million jobs. That doesn’t mean that 500,000 home health-care workers will be fired tomorrow, but it does mean that they’re at serious risk for layoffs in the next three years.

So we’re talking about a massive job-killer in a field dedicated to treating the health problems of the elderly.

Here’s industry research firm IBISWorld, basically declaring that the outlook for what was, not long ago, one of the fastest-growing health-care fields looks grim:

Prior to December 2013, the Home Care Providers industry was quickly becoming one of the fastest growing healthcare industries in the United States. Home care saves billions of dollars every year by allowing patients to avoid high-cost healthcare settings, such as hospitals . . . 

To help pay for other provisions of the recent healthcare legislation, the Centers for Medicare and Medicaid Services announced the implementation of a four-year 3.5% annual reduction to the Medicare base payment for home healthcare services beginning in January 2014. The National Association for Home Care and Hospice estimates that the magnitude of these reductions will likely render three-quarters of all industry operators unable to run profitably by 2017.

(Note: That is way more than 40 percent!)

According to the Partnership for Quality Home Healthcare, the industry experienced its largest job loss in more than a decade in December 2013; although the Medicare reductions were not officially implemented until 2014, CMS’s announcement was enough to spur industry operators to begin cutting costs. The industry is aggressively lobbying Congress to reconsider or revoke these reductions, but unless that happens, IBISWorld expects industry revenue to decrease in the five years to 2019. Spurred by slow revenue growth in 2014, IBISWorld also anticipates significant profit losses across the industry, with average margins decreasing by 2019.

So what’s the administration’s angle here? They never met a dollar they didn’t want to spend, particularly in entitlements, so why are they suddenly putting the screws to the home health-care industry, of all professions? Is it that the financial forecasts of Obamacare have been so wildly overoptimistic and unrealistic that they feel they’ve got to make a big-time cut somewhere to prevent their “bending the cost curve down” promise from becoming an even bigger joke? Or does the administration have something ideological against home health care? Is it that by having the health-care provider coming to a person’s house, there’s not enough of a role for the government to intervene, manage, and meddle?

And why does Paul Ryan get ads depicting him throwing Granny off the cliff when Kathleen Sebelius really is cutting funding for care for the elderly right now?

Does that nurse who visits your home really need that paycheck?


Tags: Barack Obama , Kathleen Sebelius , Obamacare , Home Health Services


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