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Scheduled Medicare cuts will wipe out jobs

Robin Wulffson MD's picture
Medicare, job loss, Budget Control Act of 2011, healthcare jobs

According to a new report released on September 12, a 2% sequester of Medicare spending mandated by the Budget Control Act of 2011 could result in the loss of up to 766,00 healthcare and related jobs by 2021. The report was prepared by the American Medical Association (AMA), the American Hospital Association (AHA), and the American Nurses Association (ANA).

The report, which was produced by Tripp Umbach, a firm that specializes in conducting economic impact studies, measures the anticipated effect of these cuts in Medicare payments on healthcare providers and other industries.

The Tripp Umbach model reflects how reductions in Medicare payment for healthcare services will lead to direct job losses in the healthcare sector; reduced purchases by healthcare entities of goods and services from other businesses, which in turn will lay-off workers; and reduced household purchases by workers who lose their jobs. The report notes that as the impact of these cuts ripples through the economy, jobs will be lost across many sectors beyond healthcare. “Hospitals’ ability to maintain the kind of access to services that their communities need is being threatened,” noted AHA President and CEO Rich Umbdenstock. He added, “Cuts to hospital services could create devastating job losses in communities where hospitals have long been an economic mainstay.”

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AMA President Jeremy A. Lazarus, MD said, “This new report shows that the sequester of Medicare spending will lead to the loss of hundreds of thousands of jobs. Coupled with the looming 27% Medicare physician payment cut, this 2% sequester will hurt patient access to care and will inject more uncertainty into our Medicare system. We need stability in Medicare physician payment as we work to improve our nation’s Medicare payment and delivery system to promote high-quality, high-value, better-coordinated care to our patients.”

“Nurses have always strived to put patients at the center of a health care system that emphasizes prevention, wellness, and coordination of care, the kinds of services that experts agree are essential to not only improving the health status of patients, but also lowering overall healthcare costs,” noted ANA First Vice President Cindy R. Balkstra, MS, RN, CNS-BC. She added, “Cutting Medicare spending in a way that eliminates healthcare jobs is an extremely short-sighted way to contain the high cost of health care.”

The Tripp Umbach model estimates that, during the first year of the sequester, more than 496,000 jobs will be lost. The report found that the job losses will affect many economic sectors beyond healthcare, and will be spread across every state with more than 78,000 jobs lost in California alone by 2021. The report notes that for decades, the healthcare sector has long been an economic mainstay, providing stability and growth even during times of recession. The Bureau of Labor Statistics’ data shows that healthcare created 169,800 jobs in the first half of 2012 and accounted for one out of every five new jobs created this year. Tripp Umbach notes that it designed a customized model based on the national economic impact models developed by MIG IMPLAN, as well as previous impact studies. The Tripp Umbach report and other resources are available at this link.

Reference: AMA