AGA Washington Insider

A policy blog for GIs

Sequester Expected to Occur — Implications for Health Care

financial crisis_webThe new year began with Congress reaching a last minute deal to prevent the “fiscal cliff,” under which automatic spending cuts and tax increases would have occurred on Jan. 1, 2013. Congress and the President were able to come to an agreement on the tax piece, but put off the automatic spending cuts for two months, which means the sequestration is scheduled to go into effect on Friday, March 1. Unlike the fiscal cliff when Speaker Boehner and President Obama were meeting almost daily and trying to craft a deal, there has been absolutely no negotiating on the sequester. Although both sides have stated that it is not a good idea and was never meant to be implemented, both sides are playing a very high stakes game of chicken and pointing the finger at each other.

Almost everyone I speak with on Capitol Hill is resigned to the fact that sequestration will occur and most agree that nothing will happen to reverse the cuts until the American people start to feel the impact and demand action. There has been talk that Congress could address the cuts when they address the continuing resolution that funds the government through the end of the year, which will expire on March 27.

The Republicans, who months ago were railing against the automatic cuts to defense, have changed their tune and are downplaying the impact that the sequester will have. They feel as though they gave the president his wish on tax increases in the fiscal cliff deal and have not gotten any spending cuts in return. Meanwhile, the White House has been urging Congress to prevent the sequester and craft a more balanced approach that closes tax loopholes to generate more revenue and has been highlighting the impact that the cuts will have across the country.

The stalemate that the Republicans and Democrats are in is the same scenario that has stalled most of the budget talks over the past few years: Republicans are demanding entitlement reform and Democrats are demanding increased taxes.

What do these cuts mean for gastroenterology?

The sequester will mean that physicians taking care of Medicare patients will receive an automatic 2 percent across the board cut. As part of the fiscal cliff deal, physicians were given a year-long freeze, which amounted to a .6 percent increase. Therefore, physicians will now receive a 1.4 percent cut in Medicare reimbursement. Although beneficiaries were exempt from sequestration in terms of increased premiums, additional cuts on providers could impact patient access to care.

The NIH will see cuts of more than 5 percent, which will impact not only our economic competitiveness, but also hinder the next generation of researchers. NIH has indicated that up to 12,000 researchers could be impacted and grants could be cut by more than 5 percent should NIH decide to prevent furloughs for their employees.

Many believe that the impact of sequestration may not be felt right away as the agencies will be phasing in the cuts over the next few months. The key date in the negotiations will be March 27, when the continuing resolution keeping the government funded expires. Congress will have to hash out a plan to fund the government by then or else the sequester will turn into a full-blown government shutdown. As part of the American Taxpayer Relief Act of 2012, the total amount of funding for fiscal year 2013 must be equivalent to fiscal year 2012 funding or an additional sequestration goes into effect. Without a grand bargain, it is unlikely that the appropriations process would be able to fully offset the cuts from the sequestration beginning on March 1.

AGA advocates against these cuts given the impact they will have on patient care and the research community. We meet with members of Congress every day to urge them to take action to address this pending crisis. We will continue to be the voice of gastroenterology on Capitol Hill and keep you abreast as to any new developments on this latest budget impasse.

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