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Budget Control Act of 2012

What is the Sequester and What Will be Cut?

The sequester is a specified set of federal spending cuts that will take effect on March 1, 2013, unless there is congressional action before then. Originally a part of the Budget Control Act (BCA) of 2011, it is also called the debt ceiling compromise. It was meant to be an incentive for the Joint Select Committee on Deficit Reduction or the "super committee" to find a way to reduce federal spending over a period of 10 years. If the committee had passed on the compromise at that time, the sequester cuts would not be an issue today.

The Budget Control Act originally required that the cuts would start on January 1, 2013, but the expiration of the Bush tax cuts and the payroll tax occurred at the same time, creating what was called the fiscal cliff. It was felt that the combination of all of these events would put the nation into a recession, so a congressional deal was reached that only postponed sequestration.

The cuts affect all sectors of the economy and are split roughly in half between defense and domestic programs. Medical programs are especially hard hit since many cuts have already been made that impact the health of our nation.


What Do Sequester Cuts Mean for Health Care?

The highly controversial Patient Protection and Affordable Care Act (PPACA), better known as the federal health care law or Obamacare, is set to put most of its provisions into effect in 2014. If sequestration occurs, funding for this law will be affected as well as funding for many other health-related programs that affect the overall health care in our nation.

The health care industry has long been an economic support for the country and even shown stability in times of economic downturns. However, a joint study by the American Medical Association (AMA), American Hospital Association (AHA) and the American Nurses Association (ANA) determined that sequestration would cause almost 500,000 health care jobs to be lost in the first year alone. By 2021, that number would escalate to over 750,000 lost jobs, based on the two percent cut to Medicare alone.

The proposed two percent cut in Medicare will directly and indirectly impact consumers by cutting reimbursement rates to health care providers. Reductions in Medicare payments will result in job losses in the medical field, which in turn reduces purchases of goods and services and spirals to unemployment in other fields. Eliminating jobs is an ineffective way to try to contain health care costs. Health care that emphasizes education, wellness and prevention is cost efficient in the long run rather than cutting jobs and eliminating services. Nurses have always been at the forefront of these programs that provide people with access to care, and now their jobs are in danger of being lost.

Long-term care facilities have already been hit hard by reimbursement cuts for Medicare and Medicaid services. Additional cuts would severely restrict the quality of care, especially in skilled nursing facilities that depend on Medicare. Additionally, hospitals are finding that reimbursement payments are being cut, and an additional two percent cut may prove disastrous for many facilities. Local communities cannot afford the loss of access to quality health care and the loss of economic stability.

Another casualty of sequester cuts would be medical research. A White House paper reported that the cuts would eliminate about 12,000 jobs funded by research grants from the National Institutes of Health, and cuts to the Food and Drug Administration's (FDA's) Center for Drug Evaluation and Research would likely delay approvals of new drugs. It also stated that because of cuts in the Mental Health Block Grant, many people with mental illness would be excluded from treatment. Other notable cuts include over $300 million each from the Centers for Disease Control and Prevention and the National Science Foundation.

This is just the tip of the iceberg when it comes to the long-term effects of sequestration on the medical field. Programs need to be in place that deliver health care in an efficient manner at the lowest possible cost. This only can be accomplished by funding services that encourage education and preventive care. The shortsighted view of eliminating jobs and services that result in long-term benefits is counterproductive and does not save money. We only can hope that our elected legislators are aware of how detrimental sequestration cuts will be to the health of our country.

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