This summer's Budget Control Act tasked the supercommittee—composed of six Democrats and six Republicans—to identify ways to cut at least $1.2 trillion in federal spending over the next decade. If the committee failed to achieve this goal, the next step is likely sequestration, in which automatic cuts of $1.2 trillion—split between defense and domestic programs—would kick in starting in 2013. Medicare cuts would be capped at 2%.
“Sequestration means that arbitrary reductions in resources for patient care under Medicare will now be set to take effect under the law for the remainder of the decade,” Richard Umbdenstock, president and CEO of the American Hospital Association (PDF), said in a statement. “This will have an impact not just on the elderly and disabled beneficiaries of the program, but on their families,” he continued. “It will also have an impact on the ability of hospitals to provide essential public services to the communities they serve given the impact that Medicare has on the entire healthcare system. It is likely that Congress will reconsider whether this approach should take effect in January 2013 as required under current law.”
Meanwhile, the American Medical Association released a statement that chided the committee for missing an opportunity to fix Medicare's contentious physician payment formula.
“Once again, Congress failed to stop the annual charade of scheduled Medicare physician payment cuts and short-term patches, which spends more taxpayer money to perpetuate a policy everyone agrees is fatally flawed,” Dr. Peter Carmel, president of the AMA, said in a statement. “A decade of uncertainty and repeated threats of steep cuts jeopardizes access to care for seniors and military families who rely on the Medicare and TRICARE programs,” he added. “TRICARE rates are tied to Medicare rates, so a 27% cut to Medicare means a 27% cut to TRICARE.”