Sequester Cuts Will Threaten Health Care in Ohio

Barring a last-minute deal by Congress, $85 billion in federal spending cuts will kick in Friday and Ohio’s health care industry is among the many items looming large on the chopping block.

The cuts are part of the much-talked about sequester, the package of across-the-board automatic spending cuts that Congress agreed to implement on March 1 unless lawmakers and the White House could agree on a $1.2 trillion deficit-reducing budget deal. Without a deal by tomorrow, $1.2 trillion in federal spending will be cut over the next nine years, with the White House projecting $85 billion to come out this year.

The cuts could be damaging for health care and public safety. The sequester package includes a 2 percent cut (about $10 billion nationwide) for Medicare provider payments. This is on top of the 26.5 percent Medicare reimbursement rate cut Ohio physicians already face in 2014 due to the flawed Sustainable Growth Rate (SGR) formula.

The Cleveland Clinic has already factored in $22 million in lost revenue due to Medicare cuts, Clinic CFO Steve Glass told The Plain Dealer. And the sequester coupled with the SGR could mean a loss of $940 million in 2014 for the care of the elderly and disabled, among others – about $31,000 per Ohio physician, most of them independent practitioners.

The cuts also threaten medical research, physician training programs, health and wellness programs, and disease prevention programs. Many of those programs are run through the National Institutes of Health, which could see its funding slashed $1.6 billion this year.

Cuts to Medicare also mean less money for Graduate Medical Education. These are physician residency and training programs funded, in part, by Medicare. With the nation and Ohio already predicting a significant shortage of physicians within the next two years, cuts to training programs will reduce opportunities for new physicians and exacerbate the shortage problem.

The cuts could also impact health care for military personnel and their families because TRICARE, the military’s heath care insurance program, is tied to Medicare rates.

The Washington Post reports that Ohio will lose approximately $1,102,000 in funds to help upgrade its ability to respond to public health threats including infectious diseases, natural disasters and biological, chemical, nuclear, and radiological events. In addition, Ohio will lose about $3,310,000 in grants to help prevent and treat substance abuse, resulting in around 4,200 fewer admissions to substance abuse programs. And the Ohio State Department of Health will lose about $302,000 resulting in around 7,600 fewer HIV tests.

The Ohio State Medical Association (OSMA) has joined with the American Medical Association (AMA) in urging Congress to get a deal done immediately. The AMA has written a letter to Congressional leaders urging them to reach a bipartisan budget agreement.

“We believe that the arbitrary and formulaic sequestration approach is not the appropriate policy to attain our nation’s long-term health care goals,” the AMA wrote. “Congress should take a more targeted, rational approach that allows careful assessment of how to fulfill its long-term commitment to seniors, uniformed service members and their families, and public health and safety priorities.”

The sequester also impacts air travel, federal employee salaries, education, housing, law enforcement, space research and unemployment benefits. Medicaid, however, is exempt from the cuts.

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