By: Katie Booth
The looming sequester will have a significant impact on health care, including cuts to Medicare, FDA, CDC, NIH, and Affordable Care Act programs. Budget cuts could slow down the drug approval process, impede the tracking of infectious diseases, and lead to layoffs for hundreds of thousands of workers in the health care sector. Read on for sequestration by the numbers…
Medicare:
- Medicare cut by 2% ($11 billion) (not set to begin until April 1st, 2013, unlike other sequestration cuts, which are set to begin on March 1, 2013)
- Physicians’ payments cut by 2%
- Hospital Medicare reimbursement cut by $5.8 billion
- Hospitals could end up with especially large cuts under the sequester because other parts of healthcare system run on longer term contracts
- Loss of almost 500,000 health care sector jobs in the first year of the sequester according to an American Medical Association and American Hospital Association study, including job losses for 40,000 practitioners such as physicians and dentists
FDA:
- FDA cut by 8% ($318 million)
- FDA public funding cut by $206 million
- FDA industry user fees cut by $112 million (for an interesting discussion of user fee cuts and the sequester, see Patrick O’Leary’s Bill of Health blog post)
- Cuts by department (assuming 8% across-the-board cuts): $71 million to Foods, $39 million to Human Drugs, $17 million to Biologics, $11.3 million to Animal Drugs, and $26.5 million to Devices
- Longer drug approval process is likely
- Layoffs and furloughs likely
- 2,100 fewer food safety inspections
CDC:
- CDC cut by $490 million
- 424,000 fewer HIV tests leading to an estimated 800 preventable new HIV infections
- 540,000 fewer vaccines (another source suggests cuts of 30,000 vaccines for children and 20,000 vaccines for adults)
- 25,000 fewer free breast and cervical cancer exams for at-risks populations
- Layoffs for “‘literally thousands’ of CDC-trained diseases detectives” that track the spread of communicable diseases
NIH:
- NIH cut by 8% ($2.5 billion)
- “Seizure” of approximately 1,840 NIH awards (over 9 years)
- Layoffs for more than 33,000 lab technicians and scientists (over 9 years)
ACA Programs:
- Grants to states to set up insurance exchanges cut by $66 million
- Prevention and Public Health Trust Fund (which funds wellness and disease prevention programs) cut by $78 million
- Several ACA programs are exempt from sequestration: HITECH Act incentives; high risk pool program; Independent Payment Advisory Board
Other:
- Health Resources and Services Administration cut by $605 million
- Indian Health Service cut by $365 million, resulting in “3,000 fewer inpatient admissions and 804,000 fewer outpatient visits in [Indian Health Service] and tribal hospitals and clinics”
- Substance Abuse and Mental Health Administration cut by $275 million
- Community Health Centers cut by $27 million
- Office of the National Coordinator for Health IT cut by $1 million
Exemptions from the Sequester:
- Medicaid
- Children’s Health Insurance Program (“CHIP”)
- Child Nutrition
- ACA exemptions (discussed above)
Further Reading:
- Sam Baker, The Hill Healthwatch, Health World Braces for Sequester
- NPR, How the Sequester Could Affect Health Care
- Kent Bottles, Hospital Impact, Take a Stand Against Sequestration Cuts
- Tom Norton, Sequestration: What Does It Mean for Pharma?
- OMB, OMB Report Pursuant to the Sequestration Transparency Act of 2012
- American Hospital Association, American Medical Association, and American Nurse Association, Negative Employment Impacts of the Medicare Cuts in the Budget Control Act of 2011