Looming Medicare cuts threaten to have a devastating impact on the economy and jobs, according to a report issued yesterday by the AHA, AMA and ANA. The groups claim that if the 2 percent reduction in Medicare payments goes into effect this January, more than 766,000 health care and related jobs could be eliminated by 2021.


As you may recall, the Budget Control Act of 2011 put the cuts into play and made "sequester" a household word. Since the so-called congressional Super Committee failed in 2011 to reach a deal on deficit reduction, sequestration is scheduled to take hold on Jan. 1, 2013. Unless, that is, Congress and the president (whomever that may be) work something out ahead of time. Given the partisan rancor in D.C. these days, it is virtually certain that nothing will get done before the November election. House Speaker John Boehner said as much recently.

The AHA-AMA-ANA report looked at three different areas that would be affected by the Medicare cuts:

  • direct impact: health care organizations that receive Medicare payments
  • indirect impact: the impact of local industries buying goods and services from other local industries
  • induced impacts: what happens when workers don't spend their income

The report suggests that 500,000 jobs — 93,000 at hospitals — could be lost in 2013 under sequestration. More than 144,000 hospital jobs would be lost by 2021.

"Hospitals' ability to maintain the kind of access to services that their communities need is being threatened," said AHA President and CEO Rich Umbdenstock. "Cuts to hospital services could create devastating job losses in communities where hospitals have long been an economic mainstay."

The groups oppose the across-the-board cuts. AHA officials noted that a number of groups, including the National Commission on Fiscal Responsibility and Reform, more affectionately referred to as Simpson Bowles, suggested "more thoughtful alternatives to reforming the Medicare program to achieve savings."

Taking a slightly broader look at things, Deloitte's Paul Keckley does a great job of spelling out the huge budget implications facing Congress and the administration (both the current and next) in the September issue of H&HN.

What are your concerns about the pending Medicare cuts? Email me your thoughts.