Between October 1 and 17, the federal government ceased all nonessential operations because of a partisan stalemate over Obamacare. Although it is premature to declare this the greatest example of misgovernance in modern U.S. Congressional history, this impasse ranks highly.
One casualty of the showdown was any consideration of changes to lessen the impact of the across-the-board sequestration cuts that began on March 1. The cuts have caused economic and other distress across the nation, including serious impacts within the health care sector. Nearly eight months into sequestration, we can move beyond predictions and begin to quantify these effects.
Consider the following impacts of sequestration on Federal health agencies and activities:
NATIONAL INSTITUTES OF HEALTH
Cuts to the FY13 budget: $1.71 billion or 5.5%
A 5.8% cut to the National Cancer Institute, including 6% to ongoing grants, 6.5% to cancer centers, and 8.5% to existing contracts
A 5.0% cut to National Institute of General Medical Sciences, and a 21.6% drop in new grant awards
Among the effects:
- 703 fewer new and competing research projects
- 1,357 fewer research grants in total
- 750 or 7% fewer patients admitted to NIH Clinical Center
- $3 billion in lost economic activity and 20,500 lost jobs
- Estimated lost medical and scientific funding in California, Massachusetts, and New York alone of $180, $128, and $104 million respectively.
Dr. Randy Schekman, whose first major grant was from the National Institutes of Health in 1978, said winning this year’s Nobel Prize for Medicine made him reflect on how his original proposal might have fared in today’s depressed funding climate. “It would have been much, much more difficult to get support,” he said. Congresswoman Zoe Lofgren (D-Calif.) noted the irony that because of sequester cuts, NIH funding was reduced for the research that resulted in Yale’s James Rothman sharing in the 2013 Nobel Prize for Medicine.
Economic forecasters exist to make astrologers look good. Most had forecast growth of at least 3 percent (on an annualized basis) in the first quarter. But we learned just recently (in the Commerce Department’s report) it grew only 2.5 percent.
That’s better than the 2 percent growth last year and the slowdown at the end of the year. But it’s still cause for serious concern.
First, consumers won’t keep up the spending.Their savings rate fell sharply — from 4.7% in the last quarter of 2012 to 2.6% from January through March.
Add in March’s dismal employment report, the lowest percentage of working-age adults in jobs since 1979, and January’s hike in payroll taxes, and consumer spending will almost certainly drop.
Median household incomes continues to decline, adjusted for inflation. Another report out today showed consumer confidence fell in April.
The dreaded sequester cuts mandated by the Budget Control Act of 2011 went into effect this month, putting into place a 2 percent cut in Medicare spending.
While Congress can still enact a “fix” that will delay or amend these cuts, that seems unlikely as of this writing. Yet how the cuts will impact Medicare and its nearly 50 million beneficiaries is a still a moving target.
In a joint study issued September 2012 by the American Hospital Association, the American Medical Association and the American Nurses Association, it was estimated that some 766,000 jobs would be lost by 2021 if the sequester cuts went into effect.
According to the study, “Researchers forecast that more than 496,000 jobs will be lost during the first year of sequestration, and these cuts will impact health-care sectors in every state. In California alone, the health sector could lose more than 78,000 jobs by 2021.”
The recent news that thousands of seniors with cancer are being denied treatment with expensive chemotherapy drugs as a result of sequestration-mandated budget cuts raises the question of whether other patients are being equally harmed, but less visibly.
A careful study of the impact of past federal budget cutting suggests a troubling answer. That study, in a National Bureau of Economic Research Working Paper published in 2011 and revised last year, established an eerily direct link between slashing hospital reimbursement and whether Medicare patients with a heart attack live or die.
Using data from California hospitals, researchers Vivian Y. Wu of the University of California and Yu-Chu Shen of the Naval Postgraduate School examined mortality rates for heart attack patients following the Medicare payment cuts resulting from the Balanced Budget Act (BBA) of 1997. The impact of the BBA was not as sudden or clear as the current situation, where Medicare’s two percent across-the-board cut on April 1 instantly transformed some expensive chemotherapy drugs into money losers, but it was significant and long-lasting.
The researchers examined hospitals claims data for a three-year period before the BBA, a three-year period when the BBA first took effect and, finally, a six-year period after budget cuts had either permanently changed care or failed to do so. They also tried to adjust for the severity of illness of the heart attack patients – the condition is formally known as acute myocardial infarction (AMI) – and other factors.
In the end, the researchers were able to trace a clear path from Congressional budget decisions to the patient’s bedside. Payment reductions triggered by the BBA , Wu and Shen concluded, led to “worse Medicare AMI patient outcomes, and more importantly, that the adverse effect only became measurable several years after the policy took place.”
They even quantified the effect: every thousand dollars of Medicare revenue loss from the BBA translated to a six to eight percent increase in mortality rates from heart attack.Continue reading…
Infections from contaminated steroid injections, influenza outbreaks, destruction from Sandy, West Nile Virus, measles and pertussis outbreaks. These are just a few of the public health crises we faced down in 2012, thanks to the tireless efforts of local and state health departments. Each outbreak takes tremendous resources on top of day to day surveillance activities, but public health is now facing its own crisis of funding: The sequestration will cripple local and state public health departments. Analysts calculate an effective funding reduction of 9%, with the Centers for Disease Control and Prevention losing $350 million. While every federal agency will have to tighten its belt, for public health there are no more belt holes.
“Sequestration would impact every CDC program and could increase the risk of disease outbreaks,” Centers for Disease Control and Prevention Director Thomas R. Frieden recently told CQ HealthBeat. “More than two-thirds of our budget goes out to boots-on-the-ground work at the state and local level to find and stop outbreaks and other health threats.”