Specific Impacts of Sequestration on Government Healthcare Spending

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Both Democrats and Republicans say they don’t like the forced budget reductions triggered Friday, called the sequester, but they couldn’t agree on how to stop them.

The $85.3 billion in budget reductions for fiscal 2013, which ends October 1, are part of a larger package of $1.2 trillion in cuts scheduled to occur over the next decade. The reductions are split evenly between defense and domestic programs.

The sequester will not impact Medicaid, the joint federal-state health program for the poor. However, federal Medicare spending would be cut by 2 percent through reductions in payments to hospitals, physicians, and other care providers, including Medicare Advantage plans and the companies running the Medicare Part D plans. By law, the Medicare cuts don’t begin until April 1.

Cuts In Health Programs

A White House summary of the sequestration’s effects published last month includes these health-related programs:

  • The National Institutes of Health would be forced to “delay or halt vital scientific projects and make hundreds of fewer research awards,” which means that “several thousand personnel could lose their jobs,” the White House said. Twelve thousand scientists and students would be impacted because the National Science Foundation would offer 1,000 fewer research grants and awards.
  • The Food and Drug Administration would be able to do fewer drug approvals and conduct 2,100 fewer inspections at domestic and foreign facilities that manufacture food products.
  • Cuts to the Mental Health Block Grant program would mean that 373,000 adults and children would not receive mental health services. “This cut would likely lead to increased hospitalizations, involvement in the criminal justice system and homelessness for these individuals,” according to the White House document.
  • Cuts to the AIDS drug assistance program could result in 7,400 fewer patients having access to HIV medications, and the Centers for Disease Control and Prevention could conduct approximately 424,000 fewer HIV tests.
  • The Indian Health Service and tribal hospitals and clinics would also be hit by sequestration, with 3,000 fewer inpatient admissions and 804,000 fewer outpatient visits, according to the White House analysis.

This article used elements from a piece produced by Kaiser Health News with support from The SCAN Foundation.

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Posted in Denials Management, Medical Receivables, Patient Financial Services .

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