Sequester cuts will hit medical care and research

BMJ 2013; 346 doi: (Published 26 March 2013) Cite this as: BMJ 2013;346:f1996
  1. Janice Hopkins Tanne
  1. 1New York

On 1 April $85bn (£56bn; €66bn) in this year’s mandatory budget cuts will kick in, affecting doctors, hospitals, research centers, Medicare, the Food and Drug Administration, the Centers for Disease Control and Prevention, and other essential parts of US healthcare. Only defense spending will be hit harder.

The cuts must be made in the current fiscal year, which ends on 30 September. More cuts will happen in the next 10 years as part of the $1.2 trillion reduction in spending spread over the next decade.

Nationally the sequester cuts will affect research and innovation, food safety, and mental health as well as payments to doctors and hospitals. The White House has estimated that the cuts would lead to 2100 fewer food inspections and 12 000 researchers and scientists losing their jobs. Cuts to mental health would leave nearly 400 000 mentally ill adults and severely emotionally disturbed children without treatment, leading to more hospitalizations, involvement with the criminal justice system, and homelessness, the White House said.

This year the sequester cuts will reduce Medicare payments to doctors and hospitals by 2%. Public health and research programs face big cuts.

A joint report from the American Medical Association, the American Hospital Association, and the American Nurses Association estimated that 766 000 healthcare and related jobs could be lost by 2021 as a result of the 2% cut to Medicare.1

Jeremy Lazarus, president of the AMA, said, “The across the board cut will hit physicians particularly hard because of the fundamentally flawed Medicare physician payment system. Since 2001 Medicare payments for physician services have only increased by 4%, while the cost of caring for patients has gone up by more than 20%. A 2% cut widens the already enormous gap between what Medicare pays and the actual cost of caring for patients.

“Creating a larger gap between Medicare payment rates and the cost of delivering care will stifle innovation, reduce access to care, and increase dysfunction within the Medicare program.” Although Medicare payment rates to physicians have been frozen, doctors need to make investments in their practices to adopt new models of delivering care that can increase quality and reduce costs, he said, and the burden on physicians’ practices is unsustainable.

The sequester cuts will have a trickle-down effect on medical education and training, said Katie Orrico, director of the American Association of Neurosurgeons’ Washington office. Because of cuts to Medicare reimbursement, neurosurgeons were limiting the number of new Medicare patients they accepted, and, she said, “private insurance follows what Medicare does.”

She told the BMJ, “Members are feeling downtrodden . . . A lot more young neurosurgeons just out of training are being employed by hospitals or hospital systems,” and older doctors were selling their practices to hospitals.

Every state will be hit by the sequester cuts. The Federation of American Societies for Experimental Biology said that the leading research states, California, Massachusetts, and New York, could lose more than $100m each.

This year California will lose about $12.4m in environmental funding for clean water, to improve air quality, and to prevent pollution from pesticides and hazardous wastes. It will also lose about $2.6m in public health funds earmarked for improving its ability to respond to infectious diseases, natural disasters, and biological, chemical, nuclear, and radiological events and $13.4m to help prevent and treat substance misuse. And it will lose about $2m for its Department of Health Services, resulting in more than 49 000 fewer HIV tests.2

Research will take a big hit. The Federation of American Societies for Experimental Biology, representing 100 000 members, said sequestration cuts “of this scale in a short timeframe will be calamitous. It will require arbitrary funding cuts that will prevent critical research projects from reaching completion. Other potentially lifesaving research projects will not even get off the ground. In anticipation of the possible cuts, NIH funding rates have sunk to an all time low . . . The number of research project grants funded by NIH [National Institutes of Health] has declined every year since 2004.”

The budget of the NIH will be cut by about $1.6bn, after years of flat budgets. Elias Zerhouni, its former director, said that the sequester cuts would set medical science back a generation. “It would be a disaster for research, which is not an activity you can turn off from year to year,” he told the Washington Post.3

NIH grants are usually for five years. It’s not yet clear whether the budget cuts will mean fewer grants or cuts to existing grants, or both.

Tom Otis, vice chair of neurobiology at the David Geffen School of Medicine at the University of California at Los Angeles, told the BMJ that he hadn’t yet heard from NIH about existing grants. His research involves how light sensitive ion channels work in cerebellar circuits. “NIH was purposefully conservative, anticipating a problem. Non-competitive renewals could be trimmed,” he said.

“These are extraordinary times,” he told the BMJ. “You hope to keep researchers in business because it’s extraordinarily disruptive [for funding to be cut]. As an investigator and as someone who sits on expert panels, I know there’s much more high quality, exciting science than it’s possible to fund. Only 5% to 12% of applications are funded.

“To take this kind of additional cut is painful . . . It’s demoralizing to investigators. If this continues it will drive scientists elsewhere—including those who came here to train—to China, Korea, Singapore, and Japan. Europe has austerity issues, but Germany, Switzerland, England are places where top level science is done. If the US pulls back over the long term, people will go where there is opportunity.”

Already the NIH has been making budget cuts. It cut by 69% the number of staff members from its institutes and centers attending the recent Conference on Retroviruses and Opportunistic Infections. The conference, said an NIH spokesperson, “is one of the most important scientific meetings on AIDS, and while the effort was made to protect scientific presentations at the conference, the reduction in NIH attendance at the meeting will have an impact on the important work that occurs at the meeting in scientific exchange, establishing collaborations, and moving science forward at a time when AIDS research is making critical advances.”

The National Science Foundation will issue nearly 1000 fewer research grants and awards, the White House predicted, thus curtailing critical scientific research.

The Food and Drug Administration’s budget will be cut by $209m. It’s not yet clear how the cut will affect its drug approval process, which is partly funded by fees from drug companies. Cuts to the FDA could result in fewer drug and device approvals and delays in drugs and devices coming to market.

At the Centers for Disease Control and Prevention the 5% sequester cut will affect programs across the board, a spokesperson told the BMJ. No specifics on the cuts were yet available.

The CDC has a budget of $6bn. About 70% of it is given in grants to state and local public health programs. The sequester will cut the CDC’s budget by about $289m.

“Uncertainty drives change,” said Richard Stefanacci, an associate professor of health policy at the University of the Sciences in Philadelphia. Healthcare reimbursement is moving away from a fee for services policy that pays for volume of services to a bundled care policy that pays on the basis of outcomes.

Stefanacci said, “The goal is to decrease cost . . . We need to do more care with a lot less. Some fields are too richly reimbursed.

“We will start to see physician access issues, as there’s a bubble of physicians looking to retire . . . and doctors are opting out of taking Medicare patients. If access is an issue, that may mean increased access to nurse practitioners and physician assistants . . . We’ll see more in a year.”


Cite this as: BMJ 2013;346:f1996