Sequestration Will Lead to Cuts in Services and Jobs

The White House released an analysis of some of the impacts of the upcoming sequestration. The Budget Control Act of 2011 (BCA)(P.L. 112-25) required mandatory cuts to expenditures if Congress could not approve a reduction in spending by January 1, 2013. That deadline was extended to March 1, 2013 by the American Taxpayer Relief Act of 2012 (ATRA) (P.L. 112-240). Very little discussion let alone action has taken place that leads anyone to believe that the sequestration will not occur on March 1, 2013.

FDA Cuts

Under the sequestration many cuts will be made, and many programs will be delayed or suspended. The White House noted that up to 2,100 fewer food inspections could occur as a result of the sequestration. The Food and Drug Administration (FDA) may have to furlough employees for approximately two weeks resulting in these fewer inspections at domestic and foreign manufacturers of food products.

In addition, the White House estimates that the FDA’s Center for Drug Evaluation and Research would face delays in getting new drugs to the market. The White House said the FDA would likely also need to reduce operational and support for meeting review performance goals, such as the recently negotiated user fee goals on new innovative prescription drugs and medical devices.

Health Care Cuts

In the area of health care the White House said that cuts to the Mental Health Block Grant program would result in over 37,000 seriously mentally ill adults and seriously emotionally disturbed children not receiving necessary services. These cuts would likely lead to an increase in hospitalizations, involvements with the criminal justice system, and homelessness amongst this population. In addition, sequestration would result in 8,900 homeless people with serious mental illness not getting vital outreach, treatment, housing and support from the Projects for Assistance in Transition for Homelessness (PATH) program.

Medicare Cuts

The BCA capped Medicare cuts at 2 percent. In an earlier report the Congressional Budget Office (CBO) determined that the sequestration would result in a $4 billion reduction in Medicare spending for the remainder of fiscal year (FY) 2013. The American Hospital Association (AHA), the American Medical Association (AMA), and the American Nurses Association (ANA) estimated that this sequestration would result in the loss of 496,000 health care related jobs within the first twelve months of the sequestration. AHA President and CEO Rich Umbdenstock said, “Cuts to hospital services could create a devastating job losses in the communities where hospitals have long been an economic mainstay.”