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What if home health care agencies, funded by Medicaid, collapsed all across the country under the weight of the Affordable Care Act’s penalties in the “employer shared responsibility for health care coverage” section?  William A. Dombi, executive director of National Council on Medicaid Home Care, says “We need to start an advocacy fire under this issue,” as access to care will be in serious jeopardy.

A timely action link below should be forwarded to any and all small business owners, not only to owners of home health care agencies.  There is a rapidly closing window when public comments on this issue may make a difference--but this is the best kept secret in Washington!

A recently completed nationwide survey of home care companies on the potential impact of the employer penalties under the ACA clearly shows that home care access will be in peril and that workers will be hurt as well, with employers curtailing working hours to try to avoid the penalties.  Dombi says the problem is especially acute with Medicaid home care providers, where payment rates are far from sufficient to allow for an employer-paid health insurance or coverage of the penalty.

Dombi said, in meeting recently with Treasury and Health and Human Services, that it makes no sense to use Medicaid dollars to pay a government penalty.  This would take health care monies and turn them into general tax dollars.

To put a human face on the issue, consider the case of a young father, who used an SBA as well as a family loan to purchase a home health care company in Arizona.  With one hundred employees, the penalty for not providing coverage would amount to four times the owner’s own salary.  While his preference would be to provide affordable coverage, he was quoted a per employee price of $6,000—three times the penalty.  Because his company carries debt, paying the penalties alone would put him on the verge of bankruptcy.

SHOP—the small business health insurance marketplace—is not due to go online until October 1, 2013—only three months before the penalties kick in.  But even if the marketplace were to provide affordable coverage at less than the cost of the penalty, a small business with over fifty employees would not be allowed to use that marketplace until 2015—too late for most of these Medicaid-funded companies.

What will become of the 100 caregivers?  What will become of the 90 clients who require home health care?  And what of the small business owner who will be forced to default on both loans and declare bankruptcy? Multiply this one company by innumerable companies across the nation whose future will be imperiled without a legislative “fix,” an executive order, or an interpretation of the IRS ruling that controls penalties.

It is unclear whether President Obama himself is aware of this unintended consequence of his signature achievement in his first term.

Julie Veratti of the Small Business Administration offered one possible glimmer of hope to small businesses in a state of panic.  The IRS Regulation (REG-138006-12) that will enforce this aspect of the ACA has not been finalized yet.  Though the opportunity to make public comments on the issue is a well-kept secret, they are welcomed into the public record, but only until March 18th.  A public hearing on the final regulations will be held in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC on April 23, 2013 at 10 a.m.

Small business owners need to know that they can make public comments, by referencing REG-138006-12 at the Federal eRulemaking Portal at, or by going  directly to:
It is important to attach a file with the company’s entire comments, as messages are truncated and content will otherwise be lost.

In Congress, Sen. Tammy Baldwin (D-WI) along with co-chairs of the Congressional Home Health Caucus—Rep. Jim McGovern (D-MA) and Rep. Walter Jones (R-NC), have been apprised of these unintended consequences of the Affordable Care Act.  Baldwin, as a congresswoman, was involved in the writing of the legislation and has been keenly involved in issues regarding seniors.  But will these and other members of Congress bring enough heat and light to the issue to effect a fix before the penalties take effect January 1st? William Dombi sees “a great reluctance to amend the ACA.”

Nevertheless, for the sake of small businesses, employees, clients, and investors, the Arizona small business owner remains hopeful the media will play an important role in bringing the heat and the light to which Dombi alluded.


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Comment Preferences

  •  You have said we must do something (10+ / 0-)

    but what? What is  it want to happen. What is your end goal? Home care givers need medical insurance, small business employees need medical insurance and now their employers must give it to them.

    Why is it that, as a culture, we are more comfortable seeing two men holding guns than holding hands?

    by jsfox on Thu Feb 07, 2013 at 06:18:08 AM PST

    •  Not all small businesses are able to pay (1+ / 0-)
      Recommended by:

      This issue is that all 100-person companies, especially those funded by Medicaid, have the ability to pay penalties, let alone "affordable health insurance."  That is the goal, of course.  But there is no "profit-trigger" whereby the government determines a company's ability to exist.  The IRS regs need to take into consideration this fact of life for small businesses.  The goal is to provide a means where they can AFFORD coverage for their employees, and they cannot even participate in the marketplace for lowering costs.  It helps no one--employees, owners, clients--if the companies go belly up.

      •  Sorry not sympathetic (12+ / 0-)

        Personally if this is painful enough maybe the small businesses  and businesses in general will start demanding single payer so that health insurance costs come off their books all together.

        Next I think these folks are whining and threatening not because they cannot find a way afford it, but because they don't want to do it. Greed has taken over for doing what might be right for your employees.

        Why is it that, as a culture, we are more comfortable seeing two men holding guns than holding hands?

        by jsfox on Thu Feb 07, 2013 at 06:34:04 AM PST

        [ Parent ]

      •  Here's a fact of life for small business: (7+ / 0-)

        (or any business)

        In determining if your business is viable, you figure your expenses - A (rent, payroll, material, equipment AND healthcare) and the amount you'll charge for your service B. If you can't deduct A from B and still have money left over, your business is not profitable. Move on.

        Unfortunately, people in business believe if they can't have additional money left over, that the government should do something. They shouldn't.

        "Mitt Romney looks like the CEO who fires you, then goes to the Country Club and laughs about it with his friends." ~ Thomas Roberts MSNBC

        by second gen on Thu Feb 07, 2013 at 07:00:17 AM PST

        [ Parent ]

      •  Umm... If your business model requires (6+ / 0-)

        externalizing costs to clear a profit, it shouldn't survive. If the chemical plant next door said that it HAD to dump waste on your lawn or it wouldn't be profitable, would you just smile and take the hit to your property value and health?

        Is the demand for services going away? Doubt it. Are this hypothetical person's employees not going to get sick? Doubt it.

        So somebody's paying for their health care. If this person can't serve demand profitably while meeting all expenses, somebody else will step in and fill the market gap who can. This is what a market economy requires.

        Not our fault he bought a loser.

      •  Home health care ... (4+ / 0-)
        Recommended by:
        Smoh, yella dawg, second gen, SilentBrook

        In my part of the country, home health care is built on the labor of mostly foreign born women who travel long distances to put food on the table for miserable wages.

        I believe that these workers save us a lot of medical cost by providing low-cost in-home care. I would much rather see them be better trained and more productive and pail a lot more for their work -- that would be better for them, their clients and employers.

        What you are suggesting is a step in the opposite, more exploitative direction.

  •  Home health care agency owners (15+ / 0-)

    get no sympathy from me.  Heard a program about this on NPR recently.  Medicare/Medicaid pays them between $15 and $18 per hour per worker but they pay workers between $8 and $10 an hour with no benefits or overtime.  
    If they're forced to raise wages so employees can afford to buy into a health care plan I see that as a good thing, not a problem.  

    •  Yep, let's do the math (7+ / 0-)


      Pay the worker $9 per hour. Now, payroll taxes including employer's share of SSI/Medicare, FUI/SUI, worker's comp, would run the company about 10% at most. As you note, they don't get vacation, 401K, don't currently get health care, no STD/LTD, or any other benefits, so:

      9 x 1.1 = $9.90, let's round it to $10.00 is the all-in labor cost.  Now, these businesses are pretty simple: the workers provide home health, the owner has maybe one other person to bill Medicaid, pays someone to do the basic HR filing, accounting, etc. Some office supplies, telephone and computer costs.

      So let's be generous and call it a 10% overhead rate, which brings the costs to $11 per hour. If Medicare is then paying $16 per hour, this gives the owner a current operating profit of $5 on the $16, or 31.25%.  

      If the health insurance is going to be $6K per employee, and ACA rules say he has to pay 60% of this to meet minimum requirements, that's $3.6K - let's round it up to $4K per employee.  an employee works about 2,000 hours per year, so that's $2 per hour.

      So, that would reduce his profit to $3 per hour on the $16 revenue, or 18.75%.  Still a damn good pre-tax profit.

      Liberalism is trust of the people tempered by prudence. Conservatism is distrust of the people tempered by fear. ~William E. Gladstone, 1866

      by absdoggy on Thu Feb 07, 2013 at 07:10:01 AM PST

      [ Parent ]

      •  If only it were that simple (1+ / 0-)
        Recommended by:

        It's not. The owner also pays the employee mileage to and from their clients residence. The owner also pays for those hours of travel. The owner pays for insurance to cover each of those 100 employees. The owner does not get reimbursed for a full 40 hours per week that they pay their employees, they only get paid for the actual hours that can be billed to medicaid. And once they do bill, they wait weeks or months to get paid, with the possibility of state reviews calling into question previous services, and even the possibility that past approved billings will be reversed.  If there are 100 employees, there must also be someone full time doing scheduling and intake. They must pay rent on a facility. During times of state hardships, as there has been in California many times over the last few decades, they must wait 3 to 6 months to get paid until the State can move expenditures into the next fiscal year.

        I'm not guessing at these numbers. I've seen them. Hands on. Operators of these small home-health agencies work on extraordinarily thin margins. The penalty could be $1 an hour for a full time employee. In many cases, they don't make $1 per hour per employee. The problem isn't bad operators. It isn't overpaid staff. It's reimbursement rates that have done nothing but go down over the last two decades, while the burdens to meet state and federal guidelines have done nothing but increase.  

        These programs have been easy targets in states with severe medicaid shortfalls. Keep cutting until all of the care providers are gone. And save money. The problem is that cutting these programs don't save money. These programs, along with Adult Day Health Car Centers which have also been cut drastically in some states, keep people out of the hospital. They are cost effective in keeping the overall medicaid expenditures down. Shortsighted cuts that lead to higher spending.

        •  The owner's can deduct the mileage and (0+ / 0-)

          they bill for the travel time.  If it wasn't to their advantage they would let the employees deduct their own mileage.  Absdoggy is right -- these have been cashcows for their owners.  Many millions  have been made from Medicare/Medicaid reimbursements for all kinds of services.  .

          •  Immaterial (0+ / 0-)

            that they can deduct the mileage for the travel time. It still costs them hard doll dollars. They cannot bill for travel time. With reimbursement rate cuts and draconian record keeping requirements, the so called "cash-cows" for owners haven't existed for more than a decade. Legitimately run small agencies of 100 or fewer care providers barely make ends meet as it is.

            •  let's agree to disagree (0+ / 0-)

              i'm sure there are some home health care agencies that do not exploit their employees but many do and it the employees who have my sympathy.  reading this more carefully it seems to me diarist was just trying a new angle on the no public option Obamacare sux meme.

              •  I don't really know (2+ / 0-)
                Recommended by:
                puzzled, AZSheri

                the intentions of the diarist. What I do know is that the near crisis conditions of the availability of home health care has not been fixed, either with the expansion of medicaid, nor the ACA itself. It's a broken system. Care providers, whether lay or licensed, work long and burdensome hours at less than market rates, while many agencies struggle to survive with cut after cut to reimbursement rates. As it is, nobody is getting rich in this industry. Survival is as good as it gets.

    •  There's a reason (4+ / 0-)
      Recommended by:
      Smoh, yella dawg, second gen, SilentBrook

      we tried to get collective bargaining for home health care employees here in Michigan.

  •  It's kind of ironic... (11+ / 0-)

    ... that they're in the health care industry but they don't provide health care to their employees.  I don't think we should make exemptions because it would be unfair to companies that provide health care to their employees.

  •  Here's a link to an example of a better way (5+ / 0-)

    to provide home health care than by expensive "traditional" agency models:

    Consumer Directed Choices

    Here's another:

    Center for Disability Rights CDPAS

    Similar programs exist for every county of NYS.

    Learn more here:

    Consumer Directed Personal Assistance Association of New York State

  •  This hypothetical company (7+ / 0-)

    being threatened by hypothetical penalties is a horror!  Clearly the only thing to do is impeach the President!

    The fact is, every real-world example that's been brought to our attention turned out to be either exempt, or facing a tiny marginal price increase.  Also, right-wing company officers who just knew the bad Kenyan Socialist was out to destroy their business.

    If you have real counter-examples, I imagine you would have provided them.

    Early to rise and early to bed Makes a man healthy, wealthy, and dead. --Not Benjamin Franklin

    by Boundegar on Thu Feb 07, 2013 at 07:00:54 AM PST

    •  Don't assume (0+ / 0-)

      This particular owner and his entire family supported President Obama to the max, both times, and supported his reforms.  The fact is that there IS no affordable coverage available without a public option, and not to be able to pool resources with other small businesses on the marketplace defeats the purpose of the reform.  But what good did insisting on a PO do then--or now?

      You also shouldn't assume what any particular person pays employees; it's not accurate, especially not in this case.  

      I am sad that you all seem to have such an unsympathetic view of a young person who has tried to do the right thing, but had to take out loans to buy a business.  Perhaps you all are independently wealthy.  The lack of empathy for an unintended consequence of this law really surprises me.  I had no idea this community was so unfeeling.

  •  Oh nos!!! That damn sky is falling again!! (5+ / 0-)

    "An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity" Dr. Martin Luther King, Jr..

    by mindara on Thu Feb 07, 2013 at 07:11:12 AM PST

  •  Split the company (1+ / 0-)
    Recommended by:

    Instead of a 100 employee company, have four 25 employee companies.  I agree with the diary, when a company depends on government payment rates, sometimes they're stuck.  While the employees certainly deserve medical insurance, this employer cannot pay it.  It is goofy to tie medical coverage to employment, anyway.  It was a work around from the wage & price controls of WWII, and it just stuck.

    The example you cite is an unfortunate fact when new policies are adopted.  People fall through cracks.  Or get pinched in cracks.

    •  A good suggestion but... (0+ / 0-)

      The ACA requires one person to combine all his/her employees for several companies.  It makes no difference if one is a fast food franchise, one is a home health care company, or one is a free-standing restaurant, etc.

      They won't let you separate companies to avoid these penalties.

      We all knew there were problems with the ACA that would need to be "fixed."  I am shining a light on one particular issue that has great urgency for a young man I know, with an MBA, who has done many generous things for his employees without a law in place--just because it was "right."

      I appreciate Kane in CA adding supportive comments.

      The distressing thing is to have worked so long and hard to see these reforms passed, and then to have them "backfire" in ways that seem unable to be remedied.  There is no way to raise additional revenue in a Medicaid-funded agency, and why should Medicaid dollars go to paying penalties?

      The true solution is to give small business owners REAL and TIMELY affordable care options--and so far, they don't seem to be available.

  •  This is nonsense (0+ / 0-)

    Home health care workers need health care coverage more than most; they are constantly exposed to just about everything! And their work is taxing.

    There is no reason that these companies can't afford it, either. They make enormous profits. (One of the biggest is owned by Carlisle, Saudi and Bush. Another, United HealthCare, has the highest paid CEO in the country--over half a billion a year.)

    And don't forget, smaller companies (under 50 employees) aren't in the requirements at all! Actually, the majority of these workers in South Florida are like this.

    No crocodile tears. Every company must provide health care for its workers.

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