3 charts on sequestration, healthcare innovation and the Affordable Care Act

March 27, 2013 9:00 am by Deanna Pogorelc | MEDCITY News

On Monday, the sequestration cuts are set to touch down on Medicare, causing a 2 percent drop in reimbursement payments made to doctors, hospitals and other providers.

Dr. Paul Keckley, executive director for the Deloitte Center for Health Solutions, wrote in a memo earlier this month (PDF) that providers should expect the reductions to affect their Medicare and EHR Meaningful Use payments starting mid-April.

The so-called sequester – $85 billion worth of federal spending cuts for 2013 – will impact the implementation of the Affordable Care Act, but not as much as it will other areas of the government, Keckley wrote. $11 billion of the cuts will be to Medicare providers, but those reductions were capped at 2 percent. Medicaid, children’s health insurance programs and military benefits are not directly cut.

Here’s a look at some of the other areas where the ACA will feel the impact:


In terms of what that means for healthcare innovation, Keckley suggested that although the medical device, biotech and pharmaceutical industries will continue to pay user fees to the FDA, they may not receive the expected benefits, like timely product reviews and approvals.


The National Institutes of Health has said that cuts will likely trickle down to grantees who have been awarded research

funding. Keckley anticipates that could, in turn, create a riskier environment for private investors. Coupled with the potential for a slower regulatory approval process, that may push medical device and drug companies even more in the direction of streamlining their R&D, refocusing on emerging markets and seeking collaborations, he wrote.

But overall, these cuts are just more of what the healthcare economy has already been experiencing. ’It’s about the cumulative impact of cuts by employers, households, and the government’s health plans – Medicare, Medicaid, Children’s Health Insurance Program – that impact our system,” Keckley wrote.

For more in-depth coverage of the sequestration, check out the links below:

Medical research, FDA and mental health programs face budget bite

Sequestration and doctors: What you need to know

FDA chief: Sequester cuts threaten drug approval

Healthcare cuts from vaccinations to research

[Charts courtesy of Deloitte]

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