I recently read an article expressing amazement that the College of Cardinals could convene in the Sistine Chapel and select a Pope in less than two days, when our Congress and President cannot come up with a plan to deal with our federal budget deficit. This stalemate remains despite months of knowing that the Sword of Damocles known as “sequestration” would exact a 2 percent cut on major portions of the federal budget starting this month. But that is the sad fact. While there are several major plans out there (Simpson Bowles, the Rivlin recommendations) no “grand bargain” is in sight. There are many reasons for this – including the fact that Cardinals are appointed for life, and members of the House must run for office every two years, which makes it almost impossible to have votes on tough issues such as means testing Social Security or raising the age for eligibility.
So the cuts are happening. What does it mean? On the healthcare front, it means that every hospital, nursing home, rehabilitation facility and other healthcare provider that serves Medicare beneficiaries will see a payment cut of 2 percent. This may not sound like a lot, but for N.J. hospitals the nine-month impact for the remainder of 2013 is $70 million in lost payments. For home health agencies, the impact is $1.1 million; for inpatient psychiatric facilities, $1 million; inpatient rehabilitation hospitals, $2.6 million; long term acute care hospitals, $1.4 million. And for nursing homes, who care for our most frail seniors, the loss reaches $21 million. Add them all up and you have about $100 million in cuts for services rendered across the healthcare continuum in New Jersey.
The sequestration cuts are impacting the physician community as well. Together, this is a list of small and large businesses that are a large cog in the New Jersey economy. One might argue that anyone should be able to cut 2 percent from their budget, but in healthcare, provider margins are already razor thin. A 2 percent reduction in payment may mean the difference between breaking even or having a small margin, or operating in the red.
I should disclose that sequestration is affecting me on the home front as well. My husband, a federal employee, will soon have one day off, unpaid, every two weeks. (I have already started to draft my – or should I say his? – to-do list. ) He tells me it may ultimately impact the date he can retire, since he will be losing 10 percent of his days of service for the remainder of the year. Again, for those who argue that a 2 percent cut is relatively small, weigh this impact multiplied across scores of households across the United States. The overall impact on our nation’s economy could be profound.
I continue to hope that Congress and the President find the political will and the courage to act before the 2 percent cuts begin to impact the healthcare community, the people they serve and our nation’s fragile economy.