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Sequestration Health Care Cuts

POSTED: March 12, 2013, 11:30 am

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Sequestration spares Medicaid and almost all of Medicare, but automatic cuts to other federal health care programs will make it more difficult for low-income Americans to get maternal and infant care, vaccinate their children, and receive treatment for mental illness.

The federal government gives states tens of millions of dollars in grant money for health services each year, and all of those programs are subject to sequestration cuts.

In addition, Washington will be funneling less public health and research money to states because of automatic cuts to federal agencies such as the Centers for Disease Control and the National Institutes of Health.

Overall, sequestration is designed to cut about $85 billion from federal spending in the remainder of the federal fiscal year, which ends in October. About half of that total will come from a 5 percent across-the-board cut in discretionary domestic spending, which will affect many federal grants, safety-net programs and research initiatives. The other half will come from an 8 percent cut in defense spending.

It's still unclear how much federal health-care money each state would lose as a result of the sequester. But critics say it won’t be long before people start feeling the impact.

"I don’t know what the smartest approach would have been to deficit reduction," says Michael Fraser, CEO of the Association of Maternal and Child Health Programs, "but it’s not this."

One agency bracing for the cuts is the Health Resources and Service Administration (HRSA), which pays for many maternal and children's health programs. In 2011, HRSA disbursed $7 billion to the states, with a high of $827 million going to California and a low of $20 million to Vermont, according to the Trust for America’s Health, a nonpartisan group that advocates for public health improvements.

Sequestration will cut $365 million from HRSA’s budget. According to Fraser, that money would have been spent on screening newborns for genetic conditions; immunizing uninsured and underinsured children; and tobacco cessation programs for pregnant women, among other things.

The HRSA cuts will also reduce the funding to 7,000 community health centers. The centers, which are located in every state and every territory, provide health care to people living in communities that are poor or geographically isolated.

States also rely heavily on Mental Health Block Grants, which the federal government distributes through the Substance Abuse and Mental Health Services Administration. That agency is losing $168 million in the sequester. Those grants finance a variety of community-based mental health and addiction programs. According to Federal Funds Information for States (FFIS), in 2012, California received the most in federal mental health block grants at $57.4 million, while Wyoming received $491,000, less than any other state.

"What we're afraid of is that the cuts to mental health block grants could result in 373,000 adults with serious mental health issues and children with serious behavioral and emotional illness not receiving the mental health services they need," says Joel Miller, of the National Association of State Mental Health Program Directors.

Nationally, the Obama Administration claims that as a result of the sequester more than 373,000 mentally ill adults and seriously emotionally disturbed children will lose mental health services. In addition, the administration says, roughly 8,900 homeless people with serious mental illnesses will not receive care; 109,000 addicts will be denied in-patient treatment; and an additional 91,000 addicts won’t receive out-patient care.

"This will lead to increased hospitalizations, more involvement of the criminal and juvenile justice systems and increased homelessness," Miller predicts.

The cuts to Mental Health Block Grants come at the end of a four-year period in which states have reduced their overall investment in mental health services by $4.35 billion. They also come at a time when a spate of mass shootings, such as the killings in Newtown, Connecticut and Aurora, Colorado, has focused attention on deficiencies in mental health services in the country.

Sequestration also will cut $303 million from the Centers for Disease Control and Prevention. States rely heavily on CDC money, which comprises about 40 percent of their public health budgets. In 2011, the CDC disbursed $6.3 billion to the states, ranging from $18 million to Wyoming to $796 million to California.

Local and state public health departments already have laid off hundreds of public health workers as a result of the recession. Georges Benjamin, executive director of the American Public Health Association, says these new cuts to the CDC will make it more difficult to detect and stave off new infectious diseases while reducing the ability to screen for known diseases, such as HIV/AIDS.

Although medical research money is not generally filtered through the states, the National Institutes of Health's sequestration cut of $1.5 billion will be felt in research institutions in every corner of the country. In addition to slowing or stopping some medical research, those sequester cuts are likely to mean job losses at many of those institutions.

States do not have responsibility for Indian reservations, but that is another place where the sequestration will affect health care. The automatic cuts will reduce funding for the Indian Health Service by $198 million, a reduction which could decrease in-patient admissions by 3,000 and outpatient visits by as much as 804,000 in tribal hospitals and clinics, according to the Obama administration.

This article was reprinted from with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente. This story comes from Stateline, the daily news service of the Pew Center on the States.

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