Report: Medicare Cuts Could Result in Loss Of More Than 700,000 Health-Related Jobs

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The required 2 percent cuts to Medicare spending under the budget sequestration law would result in the loss of more than 700,000 jobs related to health care by 2021, according to a joint Sept. 12 report from three leading provider groups.

The report, The Negative Employment Impacts of the Medicare Cuts in the Budget Control Act of 2011, analyzed the employment impacts on health care providers and other related industries affected by the cuts to Medicare funding at national, state, and local levels. It was produced by Tripp Umbach, an economics research firm, and released by the American Hospital Association, the American Medical Association, and the American Nurses Association.

The across-the-board Medicare cuts in the sequestration law--formally known as the Budget Control Act of 2011 (Pub. L. No. 112-25)--will be implemented starting Jan. 2, 2013.

The report said that within the first year of funding cuts, more than 496,000 jobs will be lost. It also showed that employment losses will increase as the cuts do. By 2021, the 2 percent cuts will result in the loss of 766,000 jobs, the report said.

Beyond Health Jobs.

It did not address specific jobs but instead focused on broader categories of employment sectors that it said will be affected negatively by the sequestration cuts. It included real estate establishments, retail stores, and restaurants.

Even counting those jobs directly paid by the recipients of the funding dollars (such as nurses, other caregivers, housekeepers, independent contractors, or residents receiving training), the funding cuts will be responsible for a substantial loss of employment nationally, the report found. During 2013, the cuts will result in a loss of nearly 212,000 jobs; by 2021, this direct negative employment impact is estimated to be 330,127 jobs.

“The health care sector has long been an economic mainstay in our communities,” Richard Umbdenstock, AHA president and chief executive officer, said during a Sept. 12 news conference. “It has provided stability and growth even during times of recession.”

Umbdenstock said across-the-board cuts are not the way to reform the health care system. “A straight, across-the-board, 2 percent reduction on every check they send out is hardly the way to try to take on the challenge that we face,” he said.

AMA President Jeremy Lazarus, said the sequestration, on top of the looming cuts to physician payments under the sustainable growth rate (SGR) formula, “will hurt patient access to care and will inject more uncertainty into our Medicare system.” Under the SGR formula, physician fees are scheduled to be cut by 27 percent as of Jan. 1, 2013.

The report comes as AMA is circulating among physician groups to send to Congress, calling on lawmakers to cancel the SGR cuts, as well as the sequestration (see related article in the Legislative News section).

By Nathaniel Weixel  

The report is at

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