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Seniors, advocates warily watch tax cut debate

Seniors, advocates warily watch tax cut debate

AARP: Elderly may not see benefits from cuts to individual tax rate

December 10th, 2017 by Philip Joens in Local News

Julie Smith/News Tribune Villa Marie food service worker Tyrone Seals, left, serves lunch, and restorative aide Jessica Lammers prepares to deliver it to residents. It’s becoming increasingly difficult for predominantly Medicaid-funded nursing homes to attract and retain quality personnel as the disparity in reimbursement rates increases.

During lunch in the memory care unit of the Villa Marie skilled nursing facility, a nurse carried trayfuls of orange and white cake to a few dozen patients in the dining area. As soft music played overhead, a cook behind a counter handed maroon trays full of hot food to another nurse, who carried the plates to a couple dozen patients.

Every patient in this wing has a form of a neurodegenerative disease like Alzheimer's or dementia. Owners and administrators at the facility said the staff feels a responsibility to make these people feel as comfortable as possible, even if it's not quite home.

"We're going to embrace them and love them just like you," Villa Marie administrator Tracy Kennedy said she tells families when they admit their loved ones.

With the Republican plan to overhaul the nation's tax code winding through Congress, nursing homes, seniors and health care groups worry the plan will hurt seniors by cutting Medicare funding and leading to later entitlement cuts.

While owners and industry officials still don't know what impact a final bill would have on seniors, they said more funding cuts could start to affect the quality of care patients receive.

AARP, the nation's largest advocacy group for elderly and senior citizens, represents a membership of nearly 38 million people. The group said seniors may not see benefits from cuts to the individual tax rate.

The House and Senate tax plans would add at least $1.4 trillion to the national deficit, according to the non-partisan Congressional Budget Office. Because of that, spending cuts could be triggered by the PAYGO — pay-as-you-go — law, which requires automatic spending cuts to many mandatory programs for any bill that reduces taxes and doesn't offset them with revenue increases elsewhere.

The CBO said in November the laws would trigger $136 billion in cuts. Of that, $25 billion would come from Medicare — or about 4 percent of the program's $625 billion budget.

Steve Lierman's family co-owns St. Charles-based Stonebridge Senior Living Services, which operates 14 senior-living communities in Mid-Missouri, eastern Missouri and northern Arkansas. Three, including Villa Marie, are in Jefferson City.

With many differences remaining between the House and Senate bills, health care providers said they can't study the true impact of where the cuts to Medicare may be felt. Still, Lierman said, it will have an impact.

"Whatever happens to Medicare in a negative way, that's going to inherently affect the ability of communities like this one to provide a high level of care and quality of life to patients who live here," Lierman said.

Built in the 1980s, Villa Marie started as a nursing home connected to the Catholic church. The 10-bed memory care unit opened in 2015 and was followed by a 38-bed addition in May.

Medicaid pays for long-term care, whereas Medicare does not. Private pay patients primarily offset the costs of Medicaid patients, according to AARP.

About 65 percent of nursing home residents are supported primarily by Medicaid, according to AARP. Lierman agreed, saying about half of patients statewide are on Medicaid.

Kennedy said this creates a tricky balancing act for Villa Marie.

"When your funding keeps going down and down and down, your prices keep going up; it's hard to balance," Kennedy said.

Lierman said the average cost for a bed in facilities like Stonebridge's is about $180 per day. The state of Missouri reimburses facilities about $153 per day through Medicaid programs. The gulf between the cost of providing services and reimbursement by the state also keeps growing, Lierman said. Ten years ago, the difference was $7-$9 per day, he said. Today, it's more like $25-$27.

Pressure from these and other state cuts to Medicaid also means skilled nursing facilities like Villa Marie can't buy essential items to replace aging kitchen equipment, beds and chairs.

"We have 80 people in the building that we feed," Kennedy said. "So it's very hard on aged equipment to provide that high-quality food."

Last Sunday, U.S. Rep. Vicky Hartzler, R-Harrisonville, brushed aside concerns the tax reform bills could trigger PAYGO reductions, saying seniors will benefit from the plan.

"I don't think seniors need to worry about it. I think they will be helped by this bill overall with the standard deduction doubling," she said. "The first $24,000 of a couple's income will not even be taxed. So it will be reduced for seniors as well."

Hartzler prefers to look at any changes to those programs as reforms, not cuts.

"They would be reforms to make the programs more efficient because they are the major cost drivers of our debt," she said. "My goal is to preserve and protect those programs when we get to that stage."

Lierman, AARP and other senior advocates around Jefferson City fear the possibility of entitlement reform. Jamayla Long, associate state director of communications for AARP Missouri, said the group opposes any cuts to Medicare, Medicaid and Social Security because seniors have worked throughout their lives contributing to these programs and now need to see the benefits.

"We feel the need to prevent these cuts from happening because these benefits have been accrued through a lifetime of hard work," Long said.

Twenty percent of taxpayers are over age 65. Of those 6.3 million people, 5.1 million people would see no change in 2019, and 1.2 million would see their taxes increase, according to an AARP analysis. About 29 percent of taxpayers with incomes below $65,150 would see no change or see their rates raise.

After the Senate tax cuts expire, AARP estimates, 10.8 million Americans over age 65 would see no change in their tax rate.

"Even today's 65+, as well as those who turn 65 by 2027, who benefit initially may end up paying higher and ever increasing taxes soon thereafter," AARP said in a news release. "Further, as the result of growing deficits, they may receive reduced value from Medicare or other programs that are central to older Americans' well being."

Under the House bill, the standard deduction will be roughly doubled to $12,200 for individuals and $24,400 for married couples filing jointly. The Senate plan raises the standard deduction to $12,000 for individuals and $24,000 for married couples.

Still, seniors could see valuable tax deductions vanish. Currently, the increased standard deduction allows filers over the age of 65 to receive an additional standard deduction of $1,250. The House plan would repeal this deduction, but the Senate plan would keep it, according to AARP.

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The House plan would also eliminate a key itemized deduction for seniors that allows people over the age of 65 to deduct medical expenses that exceeded 10 percent of their income. A last-minute deal by Sen. Susan Collins, R-Maine, kept the medical expense deduction in the Senate plan, but lowered it to 7.5 percent of seniors' income.

If pressure keeps building on seniors and the institutions that support them, they may ultimately disappear. Because of low wages in the industry, nursing homes find themselves competing with grocery stores and fast food restaurants for nurses and employees.

"Years ago, we used to compete with hospitals for different people," Lierman said. "Today, we're competing with Hy-Vee, McDonald's and fast food because these other industries are just able to pay more."

Nikki Strong, executive vice president of the Missouri Health Care Association, which represents long-term and residential care facilities in Missouri, said 1,700-2,000 j0bs will be lost because of recent state cuts to Medicaid.

"You can't cut off their food service. You can't cut off their therapy," Strong said. "You have to cut salaries, and you have to cut jobs."

Strong and Lierman said it it's simple. Medicare, Medicaid, and other programs that support seniors have been cut so much, some nursing home businesses may simply go out of business.

"It has now gotten to this point that we have to do something because we can't keep the balls in the air anymore," Lierman said.

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