Fiscal Cliff Could Cut Medicare Payments by $11 Billion

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  • September 18, 2012
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Automatic spending cuts resulting from an agreement between Congress and the White House regarding the national debt ceiling—the so-called Fiscal Cliff—will cut Medicare payments to providers and facilities by $11 billion if implemented in January 2013, the White House Office of Management and Budget (OMB) predicts. The 2 percent across-the-board cut in Medicare reimbursement would not affect seniors’ benefits directly.
Included in the report describing how the federal government would implement $110 billion in cuts to 1,200 government agencies and programs, Kaiser Health News reports the implementation of the agreement would find half its cuts in the military. The OMB said hospitals would bear the largest share of the cuts. The Federal Hospital Insurance Trust Fund would be reduced by approximately $5.8 billion, while the National Institutes of Health would see a $2.5 billion reduction. The Centers for Disease Control and Prevention (CDC) would face cuts of $490 million, and the U.S. Food and Drug Administration (FDA) would see reductions of nearly $318 million, according to the OMB report “OMB Report Pursuant to the Sequestration Transparency Act of 2012.”
An estimated 496,000 health care jobs would be lost during the first year of cuts, according to a report funded by doctors, hospitals, and nurses groups, Kaiser said.
The OMB report maintains that funding for the health law’s insurance exchange grants would decrease by $66 million, and funding for the health law’s prevention fund would drop by $76 million. In addition, the National Institutes of Health “would have to halt or curtail scientific research, including needed research into cancer and childhood diseases,” the report states.
“This report confirms what the public health community has long known—that mandatory budget cuts to domestic programs set to take effect Jan. 1 would deprive medical research and disease prevention programs of critical federal dollars needed to fight life-threatening diseases such as cancer,” said Christopher W. Hansen, president of the American Cancer Society Cancer Action Network.
Beyond the 2 percent cuts to Medicare, the report says other non-exempt nondefense mandatory programs would be cut 7.6 percent, and non-exempt defense mandatory programs would be cut by 10 percent.
Lawmakers could still act to stop the cuts if they think doing so is in their best interests. To avoid a government shutdown in the middle of election season, party leaders in both chambers cut a deal only to prevent the government from running out of money when the fiscal year ends in September.

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