With pay hikes like this, you might need a bankruptcy attorney

Share this content:
John O'Connor
John O'Connor

President Trump just announced a new plan to slash tax rates for long-term care operators and other businesses. But his desire to aid the corporate class has apparently not made its way to the Centers for Medicare & Medicaid Services, if its latest exercise in parsimony is any indication.

Last week, CMS announced that skilled care operators should get a Medicare rate hike in 2018. That's the good news. The bad: they proposed a meager 1% uptick.

Yes, a single digit.

While this is the lowest proposed rate hike we've seen in a while, it's actually not much less than what's generally been in play lately. Last April's proposed increase was 2.1%, or $800 million overall; the final rule ultimately issued last July contained a 2.4%, or $920 million, increase. So there's a chance Congress may be in a more generous mood — if the new legal framwork even allows it — and perhaps bump the hike into the 1.4% or so stratosphere. As Mama used to say, don't spend it all in one place. But as a practical matter, there might not be anything left to spend.

Milton Friedman famously said that inflation is taxation without legislation. And many providers may soon be treated to the business end of that observation. Analysts at Nomura (a Japanese financial holding company) are already predicting that our nation's inflation rate will rise by a bit more than 2% in 2018.

Look, I'm no actuary — just a mathematically-challenged scribe. But even I don't need a calculator to figure that if your costs go up by 2%, a 1% pay hike won't cover the loss.

And that is exactly the kind of scenario many skilled care operators may soon be facing.

We're hearing a lot about how policy wonks in the White House want to create a new chapter for America. Let's just hope that when all is said and done, it doesn't look a lot like Chapter 11.

Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Emily Mongan.

    ALL MCKNIGHT'S BLOGS