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Last week, the package of federal spending cuts known as the "sequester" took effect as lawmakers failed to enact legislation that would delay or prevent the cuts mandated by the Budget Control Act of 2011. The American Taxpayer Relief Act (ATRA), passed in January 2013, temporarily delayed cuts for defense and non-defense discretionary programs, but lawmakers ultimately could not agree on budget principles for undoing the sequester.

Impact on Medicare

Cuts to Medicare benefits are specifically barred as part of the sequester, as are cuts to the Medicaid program. However, Medicare doctors and other providers will be subject to an across-the-board 2% cut.  Contractual payments to Medicare Advantage Plans (Part C),  and Medicare Prescription Drug Plans (Part D) will likewise be reduced beginning on April 1, 2013.[1] Subsidies for low-income beneficiaries and additional subsidies for beneficiaries whose spending exceeds catastrophic levels in Part D are exempt from sequestration.[2]

Though Medicare benefits are protected in the sequester, many critical non-defense discretionary programs on which some Medicare beneficiaries rely face cuts. These include home-delivered meals, transportation services, energy and heating assistance, and employment services for seniors.[3] As lawmakers continue to grapple with budget issues in the coming months, advocates and families should continue to ensure that policymakers know the effects of further cuts to services and programs that will harm older, disabled, and vulnerable Americans.

 


[1] Congressional Budget Office, Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act, available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/09-12-BudgetControlAct.pdf.
[2] Ibid.
[3] Leadership Council on Aging Organizations, Letter to the Senate on Sequester, available at http://www.lcao.org/files/2013/02/Ltr-to-Senate-re-Sequester-022613.pdf

 

 

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