Medicare cuts will cost 766K jobs, providers say

If a 2 percent reduction of Medicare payments goes through as planned, it could cost more than three-quarters of a million jobs, according to the American Hospital Association, American Medical Association and American Nurses Association.

The provider groups are urging Congress to reconsider the budget sequester and the expiring sustainable growth rate fix, The Hill's Healthwatch noted. The sequester is aimed at saving $2.1 trillion in federal spending over the next 10 years, Kaiser Health News reported. But with the cuts scheduled for Jan. 1, 2013--only four months away--it could spell disaster for hospitals and the national economy, as a whole, the report by economics researcher Tripp Umbach warned.

By 2013, the first year the sequester goes into effect, Medicare cuts could cost as many as half a million jobs, with nearly 93,000 of them at hospitals. By 2021, the total number of lost jobs would go up to 766,000, including 144,000 jobs at hospitals.

"Hospitals' ability to maintain the kind of access to services that their communities need is being threatened," AHA President and CEO Rich Umbdenstock said in AHA News Now. "Cuts to hospital services could create devastating job losses in communities where hospitals have long been an economic mainstay."

California will be the hardest hit state, according to the report. With more than one-third of hospitals in the state already operating in the red and a 10.7 percent unemployment rate (compared to the 8.1 percent national rate), according to California Hospital Association (CHA) President and CEO C. Duane Dauner, California's healthcare and economy would be severely affected.

"California hospitals already lose billions of dollars each year treating Medicare beneficiaries" Dauner said in a statement yesterday. "Another 2 percent payment reduction may not seem like a big number, but these cuts would be in addition to more than $17 billion in slashed Medicare payments California hospitals are already scheduled to absorb by 2020 as a result of the implementation of the Affordable Care Act."

California is expected to lose 50,000 jobs within the next year and more than 78,000 jobs by 2021.

For more information:
- read the report (.pdf) from the associations
- see the AHA News Now brief
- read the Kaiser Health News article
- read The Hill's Healthwatch blog post
- CHA statement (.pdf)

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