Oddsmakers predict sequestration and SGR delay

Washington White House and congressional officials in Washington have acknowledged that the large federal budget cuts and tax increases set for early 2013 probably won’t happen.

The fiscal cliff, which includes significant cuts to Medicare and other federal health programs, could be avoided through temporary fixes after the presidential election on Nov. 6. Lawmakers appear to be leaning toward punting these issues to the next Congress, as a lame-duck session is unlikely to draft and pass comprehensive legislation to address the underlying fiscal problems permanently.

The subject of the roughly $1 trillion in across-the-board cuts known as the sequester was discussed at the Oct. 23 presidential debate on foreign policy. President Obama, who debated former Massachusetts Gov. Mitt Romney in Boca Raton, Fla., stated that sequestration was not going to be implemented.

White House Press Secretary Jay Carney later told reporters that the sequester was designed as a mechanism to compel Congress to act on an alternative deficit reduction package.

“The president is confident that Congress will take the appropriate action to achieve a balanced deficit reduction package in order to avoid these onerous cuts in both defense and nondefense discretionary spending that were written into the law by Congress,” Carney said.

Organizations representing physicians, hospitals and nurses have warned that the sequester and the resulting contraction of the health care sector could cause up to 500,000 job losses and missed opportunities for new hires in 2013 alone. Congress created the automatic cuts through the Budget Control Act when House and Senate leaders, along with the White House, struck an agreement to raise the federal debt ceiling in August 2011. If lawmakers fail to develop an alternative plan to stop the automatic reductions, payments for Medicare services will be reduced by 2% in 2013.

For physicians, the sequester reduction would be on top of a 27% sustainable growth rate cut to Medicare pay set for Jan. 1, 2013. Rep. Phil Roe, MD (R, Tenn.), said during a recent interview that most members of Congress expect to approve a short-term SGR patch — lasting a couple months to a year — after lawmakers return to Washington on Nov. 13.

Congressional staffers discussed possible Medicare doctor pay scenarios during an Oct. 16 forum sponsored by Politico, an online and print newspaper based in Arlington, Va. Fixing the SGR has bipartisan support, and no one believes the 27% cut will go through, the staffers said.

“It will be dealt with despite the challenges we face at the end of the year,” said Josh Trent, a health policy adviser to Sen. Tom Coburn, MD (R, Okla.).