Home Healthcare Cuts Threaten 500,000 Jobs and Put Female-Owned Businesses at Risk

Written by Dennis Miller Subject: Casey Research Articles

That title wouldn't make for much of a campaign slogan, and yet, it's the natural outcome of one particular politician's promise. As the editor of a retirement-focused newsletter, most of the notes I receive about the Affordable Health Care Act, or Obamacare, are first-person accounts of how a reader's change in coverage or cost is affecting his finances. These (mostly sad) stories prompted several discussions with Andy Mangione, vice president of government relations of the Association of Mature American Citizens (AMAC). Andy serves as the lead legislative and government contact for AMAC in Washington, DC. He's also responsible for national grassroots outreach and developing strategic partnerships.

Andy is AMAC's man on the scene in Washington, and he kindly agreed to sit down for an interview on the significant budget cuts to home health care that have been made as a result of Obamacare. I'll let Andy get into the details.

Dennis Miller: Welcome, Andy. Thanks for taking the time to educate our readers on the latest goings-on in Washington.

Andy Mangione: My pleasure, Dennis.

Dennis: Andy, let's get right to it. I know you're very concerned about how cuts to home health care will impact seniors. This is no longer a theoretical problem. I'd like to ask a two-part question: Can you tell our readers a bit about your organization and how these budget cuts will affect "mature American citizens?"

Andy: Dan Weber, a private citizen, founded AMAC as an alternative to and competitor of AARP. AMAC is a right-of-center, conservative member benefits and senior advocacy organization for Americans age 50 and older. AMAC offers many of the same benefits and services as AARP. The biggest difference, though, is our approach to advocacy. AMAC is a member-driven organization. We do not sit in a boardroom and determine our stance on issues unilaterally. We take our marching orders from our members. They determine the issues that I bring to Washington, DC and help us to determine our policy and issues positions.

We have over 1.2 million American members living in all 50 states. We add approximately 1,000-2,000 new, dues-paying members each week.

I think it's important to describe the Medicare home healthcare recipient before getting into the cuts. The average age of this beneficiary is 82. Two-thirds live below the federal poverty level, and they have chronic illnesses like heart disease, COPD, and diabetes. These are Medicare's oldest, sickest, and poorest beneficiaries. Most of these folks reside in rural areas, and the majority of them are women.

The $22 billion cuts over four years to Medicare home health care will mean these homebound seniors will have to seek care outside of their homes. The cuts will also devastate the home healthcare sector. And where will the money from these cuts go? To fund subsidies on the insurance exchanges and to expand Medicaid—two key components of Obamacare.

Sick Seniors Forced into Nursing Homes

Dennis: I recently wrote an article about long-term care insurance, which many refer to as nursing home insurance. I pointed out that a major provision of long-term care is home health care, which is actually "avoid nursing home insurance." If the government is cutting back on money for home health care, what options will be available for those who need care?

Andy: They'll be forced to receive care in nursing homes or other institutional settings, which greatly increases their cost and negatively affects their healthcare outcomes. Also, keep in mind that most recipients of Medicare home health care reside in rural areas and do not have the same choices for nursing home or other institutional care that those who live in urban areas do.

Dennis: Won't that further overload hospitals and nursing homes, which in turn will add to the overall costs?

Andy: Absolutely. Medicare home health care saved the Medicare program $3 billion over the last three years. Expenditures for non-Medicare home health care will definitely rise since these patients will be treated in nursing homes and other institutions.

Dennis: I don't know of anyone who, given a choice, wouldn't prefer to stay at home for care. What impact will these budget cuts have on the home healthcare industry?

5,000 Home Healthcare Companies to Collapse by 2017

Andy: The Centers of Medicare and Medicaid Services (CMS) looked at these cuts and estimated that nearly 500,000 jobs in the home healthcare sector will be lost. They also estimate that 5,000 home healthcare companies will become insolvent as a result of these cuts by 2017.

Dennis: You touched on something I hadn't thought through before: the significant impact these cuts will have on working women and small-business owners. What can people do now? The budget cuts have already been passed. Is it too late?

Andy: It's not too late. H.R.5110, the SAVE Medicare Home Health Act, was recently introduced to rescind these cuts and replace them with commonsense accountability for home healthcare agencies, which would increase the quality of care for patients. The House will vote on the budget-neutral H.R.5110 in the fall, and if it passes—and it has a good chance of doing so—then it's on to the Senate.

90% of the businesses that provide home health care are small businesses. And, as I previously mentioned, CMS estimates that 5,000 of these businesses are at risk of closing their doors as a result of these cuts. Women own the majority of these businesses, and the majority of their employees—the nurses and other allied health professionals who provide care—are also women. CMS also estimated that 500,000 of these jobs are threatened by these cuts.

Also, the vast majority of the patients receiving home health care are women. Any way you evaluate it, these cuts to home health care disproportionately affect women in a very negative way.

Dennis: I'd like to ask one question on a different topic. When I've written about Obamacare in the past, I've received three forms of feedback. The first was genuine concern, and the second was political criticism. Third, I heard from a large group that basically has a hard time believing it. Their sentiment was: "That just could not happen in America!" How do you respond to people who are having a hard time believing that Obamacare is going to have a major and possibly negative impact on their lives and their health care?

Andy: I would say that elections have consequences. Not only can this happen in America, it already has happened! President Obama burst onto the national scene promising hope and change and certainly delivered on the "change" promise. Only it was not the change that most Americans were seeking.

Like it or not—and AMAC members most definitely do not like it—Obamacare is now the law of the land. All is not lost, though. There's always another federal election every two years, when Americans have the opportunity to right the ship and elect people who identify with their values and beliefs. Get involved and research candidates before giving your precious vote to an articulate, attractive candidate who looks great in a suit. Take the time to find the substance behind the style.

Dennis: Andy, thanks for sharing your boots-on-the-ground input. Hopefully our subscribers will pitch in and let their elected representatives know how they feel.

If you enjoy timely expert interviews like this one, straightforward economic analysis and no-nonsense financial insight, sign up to receive my free weekly e-letter, Miller's Money Weekly today.

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