Upcoming Health Care Taxes Could Cripple Medicaid Recipients

Taxes? On health care? But, wait, I thought Obama was expanding Medicaid and allowing more citizens to be covered by Medicaid….Why would he tax the health care industry, which would cause more health care providers to refuse to accept Medicaid?

He has to. By enacting Obamacare and expanding Medicaid, the costs of the Medicaid expansion is staggering, approximately a $1.76 TRILLION between 2012-2021.

Where will the money come from?

Many places…but some places do not make much sense.

There are more places Obamacare is cutting budgets in order to finance the Medicaid expansion. But a critical look at these 3 places from which money is coming offers deep questions as to the logic of expanding Medicaid while taxing the very services and health care entities needed to service Medicaid recipients.

Sales tax on medical devices used by hospitals and

While a 2.3% tax increase on medical devices may not sound ominous, think of this: This sales tax is excised whether or not the medical company turns a profit or suffers a loss.  The tax will hit every single medical device imaginable, from pacemakers, to X-ray machines, to prosthetics.  It is estimated that this tax could yield approximately $29 billion. The manufacturing companies will NOT pick up this tab. No way! The manufacturing companies will raise the prices on medical devices or terminate workers. With unemployment at its current rate, it is illogical to tax medical device companies, who we know, in return, will terminate workers and increase the cost of health care. It seems to be the repercussions of enacting tax laws that negatively affect our country, but these negative repercussions could be eliminated with more forethought. Merely enacting a law that appears on its face to be content-neutral is not enough. Think! Look ahead at possible consequences.  Some legislators have dubbed this tax law the “Job-Killing Tax.”

$716 Billion Slashed from Medicare

Again, on its face, the Medicare reduction in budget does not seem to affect Medicaid recipients. However, sadly, the slash to Medicare will affect those on Medicare, as well as Medicaid.  See my blog “Medicaid Expansion: BAD For the Poor” for a more detailed explanation. But basically, Obamacare promised to increase the reimbursement rate to physicians who accept Medicaid patients. In fact, Obamacare raised the reimbursement rate up to the Medicare rate. Concurrently, in order to pay for the costs of Medicaid, Obamacare slashed the Medicare reimbursement rate. Hence, another political sham. A classic smoke and mirrors rendition of making people believe the Medicaid rate would increase, but decreasing the measurement to which the Medicaid reimbursement would equal.  Today not enough physicians accept Medicaid.  The reason is simple. Physicians are not in the business of free services. If they do not get paid over their own overhead to provide Medicaid services, the easy answer is to refuse Medicaid patients. This causes Medicaid recipients to have little choice of providers and very few choices of providers in specialties.

Taxing Employer-Sponsored Health Insurance

While this tax is not definitely going into effect in 2013, the talk of this tax going into effect is widespread enough to touch on it.  Approximately 1/2 Americans benefit from employer-sponsored health insurance. Mostly, this encompasses American middle class.  These are people who make enough to not qualify for Medicaid, but benefit greatly by the employer sponsoring the health insurance.  These are not the super wealthy. Yet, this potential new tax would impose a great burden onto middle class America. It is foreseeable that the levy would create such a burden on middle class that many people now benefitting from employer-sponsored private health insurance would no longer be able to pay for the increased costs of health insurance premiums and be forced to turn to Medicaid. This would grow the Medicaid population, causing even more difficulty for Medicaid recipients to find health care professionals accepting Medicaid.

Other Obamacare taxes going into effect in 2013 include:

  • Raising the  floor for the deduction of medical expenses on income taxes from 7.5% to 10%
  • Capping individual contributions to flexible spending amounts from $5000 to $2500.

The above-referenced tax laws will affect the middle class. The middle class, if unable to handle these taxes and changes, will become Medicaid recipients. The growth in Medicaid recipients will cause Medicaid recipients to not be able to find a health care provider. Going back to the sales tax on medical devices, it is possible that physicians will no longer be able to provide Medicaid recipients with needed medical supplies, such as wheelchairs or pacemakers, because of the increased price.

I’ve said it numerous times: The Medicaid system is not equipped to handle the number of recipients that will be thrown at it in the near future. Instead of crippling the system and cause more Americans  to rely on Medicaid, we need to fix the Medicaid system. If a Medicaid recipient cannot find a doctor who will accept Medicaid, what is the point of having Medicaid?

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on December 28, 2012, in Affordable Care Act, Medicaid, Medicaid Eligibility, Medicaid Expansion, Medicaid Reimbursement, North Carolina, Obamacare, Taxes and tagged , , , , , , , . Bookmark the permalink. 1 Comment.

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