Impact of the Sequester on Health Care: By the Numbers

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:

NIH:

ACA Programs:

Other:

Exemptions from the Sequester:

  • Medicaid
  • Children’s Health Insurance Program (“CHIP”)
  • Child Nutrition
  • ACA exemptions (discussed above)

Further Reading:

kbooth

kbooth

Katie Booth Wellington was a Student Fellow during the 2012-2013 academic year. At the conclusion of her fellowship, she was a third-year law student at Harvard Law School with a focus on health care law. She attended Yale University, where she majored in English. Prior to law school, Katie worked for two years as a management consultant for pharmaceutical, biotech, and agribusiness companies. Katie was the joint Editor-in-Chief of the Harvard Journal of Law and Technology, which focuses on intellectual property law, health law, and technology law issues. During law school, Katie interned in the Health Care Fraud Unit of the United States Attorney’s Office in Boston and in the Health Care Group at Ropes & Gray. During her fellowship, Katie researched the problem of cyberattacks on wireless medical devices, focusing on the current U.S. legal and regulatory structure.

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