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New PA Economic Study: Bush Medicare Cuts Compound State Medicaid Crisis

PA Projected to Lose $96.7 Million in Economic Activity, $45.5 Million in Lost Wages

WASHINGTON, June 10 /PRNewswire-USNewswire/ -- The American Health Care Association (AHCA) today released a new economic impact analysis finding the Bush Administration's proposed $770 million (national) Medicare Part A nursing home funding cuts will not only cost Pennsylvania seniors $37.7 million in essential health benefits in the year ahead, but cause the state to lose $96.7 million in total economic activity and $45.5 million in lost wages.

According to the new study, prepared by AHCA's research division, the following schedule illustrates the direct, indirect and induced impact of the Administration's pending Medicare cut on Pennsylvania, scheduled to go into effect this summer:

Direct Indirect Induced TOTAL

Business Activity Impact ($)

37,746,103 11,850,174 47,169,152 96,765,429

Income Impacts ($)

23,969,605 3,847,755 17,681,648 45,499,008

Direct Effect represents the impact (e.g. change in employment or revenues) for the expenditures and/or production values specified as direct final demand changes.

Indirect Effect represents the impact (e.g. change in employment) caused by the iteration of industries purchasing from industries resulting from direct final demand changes.

Induced Effect represents the impacts on all local industries caused by the expenditures of new household income generated by the direct and indirect effects of final demand changes.

Total Impact is the sum of the direct, indirect and induced effects.

Labor Income is the sum of employee compensation and proprietary income.

Economic Impact Analysis: Impact Analysis for Planning (IMPLAN) software, Minnesota IMPLAN Group, Inc., 2006 data.

Copyright, American Health Care Association, 2008

Bruce Yarwood, President and CEO of AHCA, said the Medicare regulations being changed by the Bush Administration are currently helping facilities throughout Pennsylvania successfully serve higher acuity patients -- at a lower cost than other settings. "Considering the fact existing Medicare policy is beneficial to both patients and the taxpayers who finance the program, it is especially curious this regulatory policy change is being pursued by the Administration," Yarwood said. Current policy, he added, saved Medicare $709 million in 2006 alone nationally, according to an independent analysis by Avalere Health, LLC.

"The Bush Administration's proposed Medicare cuts not only threaten Pennsylvania seniors' access to quality care throughout the state, but will also negatively impact our state's economy and local employment base to the detriment of every citizen," stated Stuart Shapiro, President and CEO of the Pennsylvania Health Care Association (PHCA). "Of equal concern is the fact that the federal Medicare cuts will further undercut the strength and viability of our state Medicaid program -- already facing severe stress as it relates to adequately funding nursing home care for Pennsylvania's most vulnerable seniors," he said.

SOURCE American Health Care Association
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