In 2013, roughly $11 billion in total spending would be cut from Medicare and millions more from programs under the Affordable Care Act if automatic cuts outlined in the 2011 Budget Control Act (BCA) take effect as scheduled on January 2, 2013 according to a White House Office of Management and Budget report.

The BCA called for a debt panel to develop and pass at least $1.2 trillion in federal spending cuts over 10 years. However, the panel failed to reach a deal and the law triggered automatic cuts, known as sequestration, including a maximum 2 percent reduction in Medicare spending over 10 years.

Reductions in Medicare spending would come from payments to various health care providers, but beneficiaries would not be directly affected. However, beneficiaries could be affected if payment cuts lead physicians and hospitals to stop treating Medicare beneficiaries. Sequestration also would significantly reduce federal spending for programs under the federal health reform law, such as grants to help states establish the insurance exchanges, which would lose $66 million. Other funding cuts projected by OMB include:

  • $605 million from the Health Resources and Services Administration;
  • $490 million from CDC;
  • $356 million from the Indian Health Services;
  • $275 million from the Substance Abuse and Mental Health Services Administration; and
  • $1 million from the Office of the National Coordinator for Health IT.