Proposed tax would target nursing home residents

[cougarnurse]

What the.....! This is completly nuts. Prices are already pretty steep: Proposed tax would hit nursing-home residents | DesMoinesRegister.com | The Des Moines Register

Residents of Iowa nursing homes face a potential new state tax that could cost them about $33 million a year.

Opponents have dubbed the proposal the “granny tax,” and criticize it for targeting sick and elderly Iowans. Wealthier nursing home clients who pay their bills without government aid would feel the heaviest burden, under the bill before state lawmakers.

Nursing homes would pay the tax, which would be about 3 percent, state officials estimated. If homes pass the expense on to residents, it would equal about $1,970 a day for someone who pays $180 a day for care.

Some, but not all, of that money would go back to Iowa nursing homes, redistributed through Medicaid payments to homes that care for low-income elderly Iowans.

Supporters point out that if this tax is approved, the $33 million could be leveraged to draw in around $60 million in federal matching Medicaid payments.

Most nursing homes wouldn't need to pass along the costs, said said Steve Ackerson of the Iowa Health Care Association, which proposed the plan. About 400 homes would get back more money than they pay in taxes, while 21 would get back less money, he said. A total of 16 would be exempt from the tax.

If the tax would improve reimbursement rates, put more money in the pockets of caregivers and tap more federal money, Senate Majority Leader Mike Gronstal, D-Council Bluffs, thinks it’s a good idea.

“If it does all three, why wouldn’t we?” he said.

The problem is that the Democrats who control the Statehouse stripped out provisions that limited the use of the tax strictly for payments to nursing homes through Medicaid, said Sen. David Hartsuch, R-Bettendorf.

The bill, Senate Study Bill 1179, says the state’s portion could be used for “the long term care system.” It doesn’t specify how much that would be.

The proposal is now “merely a revenue bill,” Hartsuch, a physician, said.

“Originally, the funds were supposed to be used to raise Medicaid reimbursement rates,” he said. “This would increase the amount of Medicaid matching funds that we get from the federal government. If these are used for other purposes, then we will not get these matching funds.”

The AARP of Iowa also has some concerns about the bill, lobbyist Anthony Carroll said.

“We’re saying, ‘If you’re going to do this, we’ve got to make sure a sizable amount goes to direct-care workers,’ ” Carroll said.

If the legislation passes, the tax money would be deposited in a new state fund called the “quality assurance trust fund.”

Opponents said they know from history that money in special funds rarely goes exclusively for their intended purpose. The money often gets raided to pay for other government expenses.

Sen. Amanda Ragan, D-Mason City, who is chairwoman of the Senate Human Resources Committee, said the bill is a work in progress. “We moved it forward because it gets more money to the long-term care system,” she said.

Another advocate for the elderly believes it’s critical to come up with money to pay for good nursing care, but she’s not convinced this is the only way to get it.

Dana Petrowsky, president of the Iowa Association of Homes and Services for the Aging, said the federal government is giving Iowa plenty of money for its upcoming Medicaid expenses.

“There’s more than enough money in the stimulus bill to pay nursing homes,” Petrowsky said.

And she argued that a so-called provider tax is poor public policy because the burden would land on nursing home residents.

“You should not be financing government activities based on a tax on sick people who live in nursing homes because they’re sick,” said Petrowsky, whose association represents about 140 non-profit providers of senior services.

There would be winners and losers, Petrowsky said. Nursing homes predominantly with residents on Medicaid would get most of their money back — plus more. But other homes, including those that cater to wealthier, “private pay” clients, would not see their tax money come back.

Even private-pay clients are sick or disabled, or they wouldn’t be living in a nursing home, she said.

Because Medicaid payments don’t fully cover low-income residents’ care, private-pay residents are charged more to make up for the loss.

About 400 homes would get back more money than they pay in, and 21 would get back less money, said Steve Ackerson of the Iowa Health Care Association, which proposed the plan. A total of 16 would be exempt from the tax.

If Iowa doesn’t bring in more cash for nursing homes, rates overall nursing home rates will increase by about 7 percent, he said.

Hartsuch said it would be “cruel” to tax nursing home residents if the money would be used for more government spending.

Sen. James Seymour, R-Woodbine, a retired hospital administrator, said he is opposed to any taxes on health care. “We’re opening a Pandora’s box here,” he said.

Seymour also believes the tax would drain the savings accounts of private-pay residents sooner, then make them dependent on Medicaid sooner.

“People say, ‘I saved all my life. Why are you taxing me,’” he said.

The proposal is headed for the Senate Ways and Means Committee for further analysis, Ragan said.

[suebird3]

You know, Cat.....I seem to hear 'Tax Man' by the Beatles right about now.