Plan now for impending healthcare law changes
More provisions of the Affordable Care Act health care program, better known as Obamacare, take effect on Oct. 1. Many companies have reduced employee hours below 30 per week because of impeding costs.
Companies with more than 50 full-time employees have to offer health care or pay a penalty. Many will elect to pay $2,000 per employee because it is less costly than providing coverage. This expense, like all corporate costs, will be passed on to consumers.
The group of people who will probably be most negatively affected by this law are seniors. Congress thought this group used too much health care. To change this perception of over utilization they put several provisions in the law. Lawmakers blamed greedy doctors and medical providers for over prescribing test and procedures. When insurances such as Medicare are paying most of the bills, patients do not challenge the need for many of these tests.
Doctors do not need to call the government before they order a test. But the law does provide a strong incentive to control costs. If they exceed ACA guidelines, they get their reimbursements cut. These guidelines are set by the secretary of Health and Human Services. Beginning in 2014, doctors who treat Medicare patients must submit a long list of “health measurements” or they could lose 1.5 percent of their fees. Doctors will need more office staff to complete the extra paperwork. This will be one factor in them wanting to serve fewer Medicare patients.
Obamacare cuts $700 billion from Medicare over the next 10 years. Politically, the politicians would say that they did not cut Medicare, but they cut what they are going to pay doctors. Medicare pays doctors about 82 percent of what private insurance companies pay. As a reference, Medicaid pays approximately 56 percent of private insurance reimbursement. Medicare will be getting closer to these lower payment rates. Many doctors will not treat Medicaid patients because of the low rates. This same thing will probably happen to seniors on Medicare.
Some hospitals and providers are already starting to cut staff and programs because of higher costs and less reimbursement. Seniors may find a doctor shortage. Remember, every day 10,000 Baby Boomers qualify for Medicare.
Medicare Advantage plans are likely to go away or change drastically. These have been very popular with seniors. Often they have low or no premiums and may offer special benefits such as gym memberships. Approximately 25 percent of seniors select these plans. The government has paid a fee from Medicare to private insurance companies to provide these plans. Obamacare cuts the amount the government will pay the insurance companies by 27 percent or $3,750 per person per year.
There is an independent board that has full authority to regulate reimbursement rates for all procedures. This board is designed like ones Congress creates to do the dirty business such as voting Congress a pay raise. The independent IPAB can stop procedures from being done, by cutting payment rates to medical providers. For example, if a knee replacement cost $75,000 and they decided to only pay $25,000, do you think many hospitals would do many of them?
This independent board can only be overruled with very strict criteria. It requires a 3⁄5 super majority of Congress which is nearly impossible to get. Then, Congress must provide alternative cuts that provide similar cost savings. This all must be done between Jan. 1 and Feb. 1 of 2017. All of these things are not going to happen.
There are several steps that seniors can take for this new health care world. Confirm that your doctor will continue to accept Medicare in 2014. If you may need to see a specialist, try to get on his or her patient list before 2014. Consider moving from Medicare Advantage to a Medigap policy. There are a number of standardized options.
Be sure to select the one that best fits with your health conditions. Look at telemedicine as a possible solution to get some of your health questions answered without needing a doctor's appointment. Keep up with the news as things are changing rapidly.
Health care is one important part of your financial health during retirement. Make sure that you are including the best options as part of any comprehensive retirement plan. This area represents one of your biggest areas of expense.
Gary Boatman is a certified financial planner and a local businessman who serves as president of the Monessen Chamber of Commerce.
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