White House Releases Budget Sequester Details - Sept. 18, 2012

The White House released on Sept. 14 a 394-page report detailing the budget cuts that were stipulated under the Budget Control Act (BCA) enacted at the end of 2011. The BCA required a $1.2 trillion reduction in federal spending over the next 10 years through a process known as sequestration. The cuts are equally divided between defense and nondefense spending. Medicare cuts are limited to 2 percent of program spending in any given year, and Medicaid and other low-income programs are fully exempt from cuts. The sequestered cuts are scheduled to go into effect Jan. 1, 2013. NAPH has released a media statement on the sequestration report.

While the broad outlines of the sequestration are stipulated in the law, the new report provides greater detail about the cuts. Key health care–related issues of concern include the following:

• The total Medicare sequestration equals $11.1 billion in 2013.
• Non-Medicare domestic discretionary spending cuts will reduce current spending for the following programs by 8.2 percent:
  • The Office of the National Coordinator for Health Information Technology
  • The Public Health and Social Services Emergency Fund
  • National Institutes of Health discretionary spending
  • The Substance Abuse and Mental Health Services Administration discretionary spending (mandatory spending was exempt)
• The following non-Medicare domestic mandatory programs are limited to a 7.6 percent annual cut:
  • The Center for Medicare and Medicaid Innovation
  • The Prevention and Public Health Fund
  • Affordable insurance exchange grants
  • State grants and demonstrations
  • The Pregnancy Assistance Fund
  • National Institutes of Health mandatory spending
• Medicare graduate medical education payments appear to be limited to the Medicare 2 percent annual cuts.
• Electronic health record incentive payments are exempted from cuts.

Both political parties have seized upon this topic, expressing concern over the decrease in funding to vital programs. Many would like to circumvent these cuts before they take effect, and President Obama has indicated he would entertain other budget options if they do not lead to an increased deficit.