Sequester scare touches issues related to Medicare, Medicaid spending

Feb 28 2013

The $85 billion in scheduled spending cuts to defense and discretionary accounts are scheduled to kick in Friday, and movement toward a last-ditch strategy has not been evident.

Los Angeles Times: Boehner: Time For Senate To Get To Work And Stop Sequester
The $85 billion in cuts were designed as a last-ditch strategy to bring both sides to the negotiating table on a broad deficit-reduction plan. But without an agreement, the cuts, also known as the sequester, are poised to take effect. Up to 13% from defense and 9% from other domestic accounts will be cut in the remaining seven months of the fiscal year, vacuuming about 750,000 jobs from the economy. Social Security and the Medicaid health program for poor and elderly Americans are spared, and cuts to Medicare are capped (Mascaro, 2/26).

The New York Times: Austerity Kills Government Jobs As Cuts To Budgets Loom
But this time is different. Growth has remained sluggish and millions remain unemployed even as the federal government, riven by partisan differences, has largely turned its attention to deficit reduction. Mr. Bernanke, like many critics of sequestration, said the government could not ignore the need to reduce its annual deficits and curtail the growth of its debt. But he said short-term cuts would worsen those problems by slowing the economy. Moreover, sequestration mostly spares Medicare and Medicaid, the health care programs that are the primary reason federal spending is projected to increase. Congress and the administration, he said, should "introduce these cuts more gradually and compensate with larger and more sustained cuts in the future" (Appelbaum, 2/26).

In related news, specific states and health industry stakeholders brace for impact --

Medpage Today: Docs Brace For $11 Billion Hit From Sequester
Medicare providers stand to absorb $11 billion of the $85 billion in federal spending cuts that start Friday and last for the rest of the fiscal year unless Congress takes 11th-hour action. Under the impending sequester, Medicare payments to providers will be cut by 2 percent, and most nondefense programs will be slashed by roughly 8 percent starting Friday. The across-the-board method to limit federal spending has been criticized and deemed harmful by both political parties and nearly all interest groups. But with little agreement on what to replace the spending cuts with, it's growing more likely they will actually take effect (Pittman, 2/26).

CQ Healthbeat: Device Industry Pushes To Prevent Sequester Tax
Device company leaders are worried about the effect sequestration would have on the Food and Drug Administration's ability to train new personnel, industry officials said Tuesday. But industry officials say they are optimistic that Congress will change a statutory quirk that prevents the agency from spending the increased user fee revenue authorized in a measure lawmakers passed in 2012. If Congress does act, that would free up some money the FDA could use for such activities as training new workers (Adams, 2/26).

Wichita Eagle: Kansas Could Lose Millions With Sequestration Cuts
Kansas will lose at least $79 million in funding for the state's military bases and face about $10.8 million in cuts to education this year if Congress and the president can't reach agreement to head off automatic budget cuts scheduled to begin Friday, according to a new White House report. Those and other Kansas-specific cuts -; part of the national sequestration debate -; are detailed in a state-by-state report released by the White House Sunday evening. … Public health -; Kansas would not receive more than $1 million in grants, including $610,000 for substance abuse, prevention and treatment; $273,000 to prepare for responses to threats such as infectious disease outbreaks, bioterrorism, nuclear or chemical accidents; $85,000 for childhood vaccinations; and $65,000 for HIV testing (Lefler, 2/26).