Summary: What does sequestration mean? What organizations are affected by the sequestration?

What does sequestration mean?

The official definition in terms of the budget is a US legal procedure in which automatic spending cuts are triggered. In a nutshell, effective March 1, 2013, the government spending cuts go into effect in an effort to try to reduce the federal deficit which now is over $16 trillion. For 2013, the amount of spending cuts is estimated to be about $85 million, with additional cuts through 2021 for a total of about $1.2 trillion. These cuts are split evenly between defense and non-defense.

What organizations are affected by the Sequestration?

Which government funding programs are included in the “across-the-board” sequestration?

Our last article dealt with those funding programs which were not affected by the spending cuts as part of the sequestration. Now let’s focus upon the programs which are directly or indirectly affected. Part 1 highlighted cuts to Medicare, FDA, NIH, and medical schools and teaching hospitals. But wait, there’s more……

1. Centers for Disease Control and Prevention – This may provide, for example, fewer funds available for disease and immunization research, fewer vaccines available for flu shots and/or additional costs to receive them.
2. Although specific programs not yet known, reductions in federal support of public health programs will likely slash immunization and public health. Research labs funded by the NIH and mental health services funded by Mental Health Block Grant are expected to be affected.
3. Sequestration will undoubtedly negatively affect the implementation of the PPACA. Federal agencies including HHS and IRS charged with implementing PPACA programs will be forced to reduce administrative costs. Many PPACA programs and demonstration projects intended to reduce healthcare costs may never be funded, and fewer administrative resources will be available to implement those programs that are funded.
4. Military cuts
   1. The Navy is standing down four of its air wings. This service has already begun cancelling performances by its popular Blue Angels
      

      What does sequestration mean for the U.S. military?

      flight demonstration team. Cancelling the scheduled maintenance for the Navy’s warships this year disrupts a shipyard’s precisely laid schedules, which are set out heel to toe years in advance.

   2. The Army will curtail training for all units except those bound for Afghanistan, meaning a readiness hit for about 80 percent of the active force.
   3. The Pentagon will soon give notices to thousands of employees expected to be furloughed in early April.
   4. Military training will begin curbing.
   5. Readiness crisis expected later this year.
   6. The Airforce is cutting back on flying hours which can have a huge impact on combat pilots.
5. More than 1 million employees of other federal agencies prepare to receive furlough notices except of course the pay of Congress. Congress’ pay is exempt from the sequestration. Does that seem right to you? Cuts across the board in which other federal employees will receive furlough notices but not Congress. What kind of message does that send? What kind of example does that set?
6. HHS mental health programs
7. World Trade Center Fund
8. Health insurance exchange grants – If the grants are cut for the exchanges, who will pay the additional premiums?
9. Prevention and public health fund
10. IRS enforcement

What does sequestration mean for your healthcare organization?

The primary results of the sequestration are: setbacks in medical research and training, reductions in Medicare and indirectly Medicaid, and threats to our national defense. Is this really a good plan?

Do You Need a Healthcare Financial Analyst?

Do you need a healthcare financial analysis? Do you want to avoid sequestration in your organization? Please contact our healthcare financial consultants to see how we can assist you.

BHM Healthcare Solutions – a healthcare management consulting firm

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