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Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

OMB Releases Sequestration Report Outlining Cuts to Research, Other Programs

September 21, 2012—After a one-week delay, the White House Office of Management and Budget (OMB) Sept. 14 released its report projecting cuts that will occur to federal programs Jan. 2, 2013, under sequestration.

The preliminary estimates in the report indicate that sequestration will result in an 8.2 percent reduction to eligible nondefense discretionary funding, a 2 percent cut to Medicare, and a 7.6 percent cut to other eligible nondefense mandatory funding. Medicaid and funding for the VA Health Administration are exempt from sequestration. Defense discretionary programs will receive a 9.4 percent cut, while mandatory defense spending will be cut 10.0 percent.

OMB estimates that Medicare will face a reduction of $11.1 billion from a total $554.3 billion in Medicare spending. Medicare incentive payments for health information technology, provided through the American Recovery and Reinvestment Act (P.L. 111-5) are exempt.

For NIH, the report indicates that $30.711 billion in discretionary budget authority will be subject to the 8.2 percent sequester, equal to $2.518 billion, and an additional $150 million in mandatory budget authority (for diabetes research) will be subject to a 7.6 percent cut, equal to $11 million. The total cut to NIH will equal $2.529 billion.

Funding for the Agency for Healthcare Research and Quality (AHRQ) is exempt from the sequester because it is provided through the Public Health Service evaluation tap, as opposed to direct appropriations. However, the Patient-Centered Outcomes Research Trust Fund, which funds the Patient-Centered Outcomes Research Institute (PCORI), will be subject to a 7.6 percent cut, amounting to $30 million from the $390 million fund in FY 2013.

The report does not provide program-specific details for budget items under the Health Resources and Services Administration (HRSA), such as the Title VII health professions programs and Children’s Hospitals Graduate Medical Education (CHGME). According to the report, however, discretionary programs at the agency will be subject to an 8.2 percent cut.

Mandatory appropriations, such as funding provided through the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) for the Prevention and Public Health Fund and the National Health Service Corps, will receive a 7.6 percent cut.

Congress required the White House to produce the report in the Sequestration Transparency Act (P.L. 112-155), since administration guidance previously only had urged Congress to resolve sequestration through legislation and pledged future discussions with agency heads [see Washington Highlights, Aug. 3].

Contact:

Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525
Email: trasouli@aamc.org

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org