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The Fiscal Cliff and the Middle Class Poor

 

 

by Larry Minnix Published On: Nov 28, 2012 / Updated On: Dec 03, 2012

A number of members have been in contact with me recently to get perspective on the current budget battles in Washington -- the so-called fiscal cliff issue.  One was a CEO with multiple communities who has a commendable practice of meeting with residents and employees to interpret what they hear on cable news.

His questions mirrored what many members have been asking:

  • How will residents’ benefits will be affected?
  • How will my grandchildren be affected?
  • How will my tax return change?
  • How will charitable giving be impacted?
  • How should my business and strategic planning change?

Employees want to know whether they can spend more or less on Santa Claus, whether take home pay goes up or down, when they will have insurance coverage—and whether they will have a job.

Senior leadership teams want to know if Medicare reimbursement will change because its margins support services that do not break even. They want to know if they can give employee increases or if they will have to freeze pay or worse.

They wonder how to factor health insurance planning into operating budgets with the new insurance exchanges. They have capital plans and wonder how access to capital will be affected. In short, they all want to know WHO to worry about, WHAT to worry about -- and WHEN.

So, here are my thoughts on those questions looking out 4 years, 2 years, and 4 weeks.

4 Years Out

Because health care is such a major part of the economy, it will be priority number 1.

In 4 years, managed care will be the dominant delivery and financial paradigm. Fee-for-service is a “dead man walking.” Providers, managed care companies, state Medicaid programs -- all those that have learned how to do managed care well -- will be the winners in every community.

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