White House: Medicare cuts to cost $11B

Automatic budget cuts will reduce Medicare payments to providers by 2 percent, or $11 billion a year, the White House budget office told Congress Friday in a report.

Under the Budget Control Act of July 2011, a supercommittee was charged with trimming $1.2 trillion over the next decade or else automatic cuts, split between domestic and defense programs, would go into effect, The Washington Post reported. Stalled by a political gridlock, the first round of automatic cuts is scheduled for January, only a few months away.

"Sequestration is a blunt and indiscriminate instrument. It is not the responsible way for our nation to achieve deficit reduction," the report states.

Though Medicare beneficiaries will be spared, providers will be hit by the cuts. For hospitals specifically, Medicare payments would drop by up to $5.8 billion, The New York Times reported. With reimbursement reductions, providers may therefore be de-incentivized to see Medicare patients.

"Hospitals will have to make tough choices about which services to maintain because of potential cuts since hospitals will maintain the highest quality for whatever services they provide," American Hospital Association (AHA) spokesperson Marie Watteau told HealthLeaders Media.

The AHA, American Medical Association and American Nurses Association warned that if the 2 percent reduction goes through, it could cost 766,000 jobs, they said in a report last week.

For more information:
- see the OBM report (.pdf)
- read the NYT article
- here's the Washington Post article
- read the HealthLeaders Media article

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