Sequester Takes Effect, Health Leaders Eye Cuts

By Jennifer Larson, contributor

March 4, 2013 - The threat of sequestration and its repercussions loomed for weeks, but many hoped that federal lawmakers and the president would come to an agreement to avoid the deep federal budget cuts that would be a result.

However, when the U.S. Senate rejected on Feb. 28 both Democratic and Republican proposals that would at least mitigate parts of the sequester for the rest of fiscal year 2013, that was it.  President Barack Obama signed the official order March 1, and the sequester went into effect.

Those deep federal budget cuts--$85 billion this fiscal year and $1.2 trillion over the next decade--are beginning. And many health care leaders are objecting.

Jeremy Lazarus, MD, president, American Medical Association, expressed his disappointment in a statement. “Medicare patients and physicians will now feel real pain in the form of new cuts that come at an already difficult time for the nation's economy. A report released jointly by the American Medical Association, the American Hospital Association and the American Nurses Association found up to 766,000 health care and related jobs could be lost by 2021 as a result of the two percent cut in Medicare resulting from sequestration,” he wrote.

American Nurses Association President Karen A. Daley, PhD, RN, FAAN, referred to the outcome as the “equivalent of malpractice.”

“The American Nurses Association is extremely disappointed that the nation’s elected leaders have failed to find common ground to avert the so-called ‘sequester,’” she said in a statement released March 1.  “Consequently, painful cuts in health care spending will hurt vulnerable Americans seeking care and lead to widespread job losses.”

Modern Healthcare reported that the U.S. Department of Health and Human Services has confirmed that the 2 percent payment reduction to Medicare providers and insurers will go into effect for services provided on or after April 1. Notifications to providers will go out soon.

However, perhaps an even greater fear for many is the potential effect on medical research.

According to a statement from research firm GlobalData, the sequester will have a devastating impact on medical research.

“This trend could be reflected in medical research more broadly, as the Office of Management and Budget (OMB) estimates sequestration would lead to the NIH issuing about 2,300 fewer grants to medical researchers in FY2013, representing almost a 25% reduction in the NIH’s competitive grant allocation,” GlobalData said in a statement issued Feb. 28. This move could be “potentially devastating for biomedical researchers,” including researchers who already have projects in the works, as well as first-time investigators.

The Los Angeles Times quoted National Institutes of Health (NIH) Director Francis Collins, who said that his agency could stand to lose as much as $1.6 billion by the end of this year, even though it has operated with a flat budget for a number of years.

GlobalData analyst Adam Dion, said, “This would also set a dangerous precedent for the country moving forward and potentially jeopardize American leadership in science and innovation in an increasingly competitive global environment. Many in the academic community believe that low grant funding could discourage the next generation of scientists from pursuing careers in medical research.”

The White House has published a list of other agencies that will be affected by the cuts.

Congress could work on measures to alter the effects of sequestration in the weeks ahead, but in the meantime they must come to a deal on the federal budget before the government could shut down on March 27.

Related articles:
Sequestration Will Be Costly to Healthcare Workforce


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