How the Sequester is Killing Healthcare Jobs

Sequester-driven budget cuts to Medicare are threatening to spur massive job cuts in the healthcare industry.

And the pain doesn't stop there - the sequester cuts are already making healthcare harder to obtain for some Medicare patients.

Unfortunately, this is just the beginning. The longer Congress allows sequestration to continue, the deeper the cuts will go and the more widespread their impact.

When President Barack Obama and Congress failed to reach agreement on $1.2 trillion in cuts to federal spending before March 30 -- as mandated by the Budget Control Act of 2011 -- the sequester kicked in.

Medicare providers faced mandatory 2% across-the-board reductions in their reimbursements.

After the cuts went into effect on April 1, hospitals, doctors, insurers, prescription drug plans, and other healthcare providers immediately felt the impact.

In short, the sequester is delivering precisely the kind of broad, damaging and indiscriminate cuts that politicians warned would happen.

And as each day passes, the drastic consequences grow worse.

How the Sequester Is Costing Jobs

To bickering pundits in Washington, the sequester seems like an abstract economic concept that may knock a point or two off the gross domestic product (GDP). 

But on Main Street, the pain is real.

Medicare providers that offer Advantage plans (Part C) and prescription drugs (Part D) felt the effect of the cuts right away because they get paid by Medicare on the first business day of every month.

Meanwhile, payments for services under Medicare Hospital Insurance (Part A) and Medigap Insurance (Part B), will take longer to trickle down through the system.

And while Medicare payments will be slashed by a relatively small $3 billion this year, budget reductions will lop off a whopping $123 billion from 2013 to 2021, according to the Congressional Budget Office (CBO).

That means healthcare employment will be taking a big hit.

According to a study released by the American Medical Association, the American Hospital Association and the American Nurses Association, job losses will soon spread like a virus across the economy.

Healthcare-related industries will lose more than 496,000 jobs in just the first year of the sequester, and the number of lost jobs will reach 766,000 by 2021, the study said.

The damage will be widespread, with hospitals and physicians' offices experiencing the worst losses, followed by dentists, nursing and residential care facilities and diagnostic labs. Suppliers will feel the pain later.

The nursing profession may be in for a particularly rough ride.

Nursing facilities say they are planning to lay off more than 20,000 registered nurses, licensed practical nurses, certified nursing assistants, therapists and other staff, according to a survey by The Alliance for Nursing Home Care.

More than half said they plan to reduce benefits, and roughly 75% said they will modify wages.

Sequester Strikes Medicare Cancer Patients

Meanwhile, the sequester cuts have created a crisis for cancer patients on Medicare.

You see, under sequestration, the government reduced funding for chemotherapy and other drugs critical to cancer patients.

In fact, the entire 2% reduction must come out of oncologists' overhead for storing and administering the drugs.  That puts a significant burden on cancer clinics.

"When I look at the numbers, they don't add up...we can't stay open if we don't cover costs," Ralph Boccia, director of the Center for Cancer and Blood Disorders in Bethesda, MD, told the Washington Post.

Clinics that remain open will likely be forced to drastically reduce the number of patients they see.

North Shore Hematology Oncology Associatesin Long Island, NY, recently announced that one-third of their 16,000 Medicare patients would have to seek treatment elsewhere, according to the New York Daily News.

Most will turn to hospitals, which may or may not have the capacity to meet the increased need. That means some cancer patients may simply have nowhere to turn.

On top of that, patients fortunate enough to find a nearby hospital to treat them will pay an average of $650 more per year for treatment, according to the actuarial firmMilliman Inc.

Some patients may not be able to foot the bill.

"People that can't afford their medications just don't take them ... and they wind up dying," cancer patientHelen Jeton-Mantooth told the Center for American Progress.

Sequester Cuts Add to Costs

What's more, the government's attempt to save money by cutting Medicare may actually backfire when everything is said and done.  

The Milliman study says the government could pay an average of $6,500 more per year for cancer patients in a hospital versus a community clinic.

So not only will some cancer patients will be left out in the cold - American taxpayers will end up paying more.

But if Medicare patients think things are bad now, they'd better buckle their chin straps.

When Obamacare launches full force in 2014, it whacks Medicare with $41 billion in additional cuts-on top of the current sequester cuts of $9 billion.

For more on how the sequester is affecting your money, read our report: Sequester Circus Proves How Much Washington Hates America

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