Administration Releases Report on Sequestration

September 14, 2012


The Office of Management and Budget has released its 394-page report on the forthcoming sequestration process required by the Budget Control Act of 2011. The act requires that, because Congress could not agree on how to make sizeable cuts in federal spending, a number of mandatory spending cuts will go into effect automatically, starting January, 2013.


The report provides that “the sequestration would be deeply destructive to national security, domestic investments, and core government functions” and that “The Administration strongly believes that sequestration is bad policy, and that Congress can and should take action to avoid it by passing a comprehensive and balanced deficit reduction package.”


Unless Congress acts by the end of the year, Medicare providers will receive a two percent cut – totaling about $11 billion -- to their reimbursement starting in 2013. Medicare benefits will not be cut nor will payments to certain low-income programs provided in Medicare, such as the low-income subsidy provided in Medicare Part D.


The American Hospital Association, American Medical Association, and the American Nurses Association have released a report on the employment impacts on healthcare providers and other related industries affected by the cuts to Medicare funding. The report estimates that in the first year of the sequestration cuts some 500,000 healthcare related jobs will be lost. California, Florida, and Texas are expected to experience the biggest job losses while Alaska, DC, and Wyoming are expected to experience the fewest job losses.


Among the healthcare items identified, the OMB report finds that:


  • Nondefense CDC spending would also be cut by 8.2 percent, or about $464 million.
  • “The National Institutes of Health would have to halt or curtail scientific research, including needed research into cancer and childhood diseases.” The report identifies a sequester percentage of 8.2 percent, or $2.518 billion.


The OMB report may be viewed at