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Medicare providers warn sequestration could cost 500K jobs in first year

You knew this was coming: Just four months before a series of automatic spending cuts kick in, Medicare providers warned that, if those cuts become reality, hundreds of thousands of jobs will be lost.

The report, funded by the American Hospital Association, the American Medical Association and the American Nurses Association, predicts that the 2 percent cuts to Medicare providers included in the “budget sequester” beginning in January will cause as many as 766,000 health care and health-related jobs to disappear by 2021. An estimated 496,000 jobs will be lost during the first year of the automatic cuts.

[See also: Healthcare gains 17K jobs in August]

“Sequester” refers to the automatic mechanism put in place by the 2011 Budget Control Act that aims to trim federal spending by $2.1 trillion over the next 10 years.

The report also notes that California will suffer the biggest hit  – “more than 78,000 [healthcare] jobs lost in the state’s economy” by 2021.

At a news conference Tuesday in Washington D.C., Richard Umbdenstock, president and CEO of the AHA, said his organization has been talking to lawmakers about other areas to look for cuts, including changes to the Medicare program itself. “Unlike the sequester, which exempts beneficiaries from any change, I think there’s been a lot of conversation about the need to look at the age for eligibility and cost sharing provisions,” he said.

The AMA president, Dr. Jeremy A. Lazarus, warned in a statement that the Medicare cuts combined with a separate, scheduled 27 percent cut in Medicare physician payments will “inject more uncertainty into our Medicare system.”

In a press release from the Alliance for Quality Nursing Home Care, president Alan G. Rosenbloom said nursing homes would also be hit hard by the sequester. The group estimates that the states with the highest Medicare cuts to skilled nursing facilities under the sequestration include Florida, with a $66 million hit; Ohio, with a $37.3 million reduction; and Pennsylvania, with a $36.9 million drop.

While members in both parties have said they hope to avoid the series of automatic cuts, it’s not clear what will happen. For example, earlier this week House Speaker John Boehner said he was “not confident” Congress could reach a deal before the budget sequestration will begin in January. Medicare is expected to reduce federal spending on the program by $11 billion in 2013 alone, according to an April analyses from the left-leaning research group the Center on Budget and Policy Priorities.

This article was reprinted from with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.