Sequester To Take Effect; Obama Must Specify Cuts by Midnight
President Obama will be required by law to issue a sequestration order specifying the $85 billion in mandated spending reductions by 11:59 p.m. Friday, as lawmakers show no signs of reaching a deal to avert the cuts, USA Today reports (Jackson, USA Today, 3/1).
The mandated cuts involve nearly $1 trillion in across-the-board reductions, including a 2% reduction to Medicare reimbursement rates. In January, President Obama signed legislation -- negotiated by Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) -- that delayed the cuts until March 1 (California Healthline, 2/28).
According to USA Today, the order that Obama is likely to sign will include budget reductions in amounts calculated by the Office of Management and Budget. OMB also will send a report detailing the cuts to Congress. However, not much is known about how the sequester will play out after Friday (USA Today, 3/1).
White House Press Secretary Jay Carney noted that the budget cuts "don't all happen on Saturday." He added that effect would be "significant" but their implementation would be "a gradual process" (Becker, "On the Money," The Hill, 3/1).
Obama, Congressional Leaders Meet To Discuss Sequester
Obama met with congressional leaders Friday morning to discuss the sequester.
However, going into the meeting -- which will include House Speaker John Boehner (R-Ohio), Senate Minority Leader Mitch McConnell (R-Ky.), Senate Majority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) -- lawmakers appeared resigned to allow the cuts to take effect at midnight (Sherman, Politico, 2/28).
In a statement issued Friday morning, McConnell said, "[T]here will be no last-minute, back-room deal and absolutely no agreement to increase taxes" (Shear, New York Times, 3/1).
Senate Rejects Two Deficit-Reduction Bills
In related news, the Senate on Thursday rejected two proposals that would have prevented the mandated spending cuts from taking effect, which essentially guarantees that the budget reductions will take effect as scheduled, the Washington Post reports (Hicks, Washington Post, 2/28).
The Republican alternative (SB 16) -- introduced by Sens. James Inhofe (R-Okla.) and Pat Toomey (R-Pa.) -- would have given OMB more flexibility to implement spending reductions to reduce their effect on vital government programs. The measure also would have prohibited any tax increases and ensure that no more than half of the $85 billion in mandated spending cuts would come from the Department of Defense (American Health Line, 2/28). The measure failed 38-62.
Meanwhile, the Democratic plan (S 388) -- which failed 51-49, falling short of the 60 votes needed to move forward -- would have replaced the mandated spending cuts with a combination of spending reductions and higher tax revenues on high-income U.S. residents (Davis, USA Today, 2/28).
Experts Predict Affordable Care Act Will Survive Cuts
Although the Obama administration has touted the adverse effects the sequester will have on health programs, experts say the administration will likely do what it takes to prevent the cuts from affecting implementation of the Affordable Care Act, Politico reports.
According to Politico, key parts of the law are exempt from cuts under sequestration, such as funding for insurance subsidies for eligible individuals to purchase health insurance through health insurance exchanges and the Medicaid expansion.
Health policy experts are confident that the Obama administration will find the funds necessary to keep implementation on track, particularly for developing the exchanges and the data hub that will help determine individuals' coverage options and eligibility for federal subsidies.
However, Ron Pollack -- executive director of Families USA -- said the sequester could compromise funding for the public outreach campaign to educate individuals on the ACA and how to enroll (Norman, Politico, 3/1).
Hospital Executives Prepare for Budget Cuts
More than 4,200 hospitals nationwide that serve Medicare beneficiaries would lose nearly $3 billion under sequestration, according to an analysis by iVantage Health Analytics, the Miami Herald reports.
The analysis shows that the sequester's 2% reduction in Medicare reimbursements would result in 73,000 fewer hospital jobs nationwide and cause nearly 100 hospitals to operate at a deficit.
Specifically, the analysis showed:
- Cedars-Sinai Medical Center in Los Angeles will face an estimated $9 million cut in Medicare reimbursements;
- Loma Linda University Medical Center in, Loma Linda, Calif., could lose nearly $4 million;
- The Mayo Clinic Hospital in Phoenix could experience an estimated $2.4 million loss; and
- Yale-New Haven Hospital in Connecticut could lose an estimated $6.4 million (Pugh, Miami Herald, 2/28).
Meanwhile, some hospitals have prepared for the sequester's cuts. For example, David Blom -- CEO of Ohio Health, a health care system that includes 18 hospitals, 23 health and surgery centers, home-health providers and other facilities -- said his company is preparing for a $12 million reduction in Medicare reimbursements by pre-emptively budgeting for the sequester (Carey, Kaiser Health News, 3/1).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.