Health Center Federal Policy

Office of Management and Budget Releases Sequester Implementation Report; Health Centers Face $167 Million Cut

by Abby Pinkele

Last week, the Office of Management and Budget (OMB) issued a report detailing the effects of sequestration, as required by the Budget Control Act of 2011 (BCA). The sequester is scheduled to go into effect January 2, 2013 and the report was intended to outline the complete impact to each program in the federal government. Congress called for the report in August and the full text can be found here.

The bottom line is that the Health Centers program would face a cut of $167 million if the sequester is not changed, delayed, or stopped. This cut is despite the protection afforded “safety net providers” in the BCA. The report details how OMB limited the protection to only a portion of the Health Center Trust Fund – carving out the funding for Homeless and Public Housing Health Centers from the 2% protection. This means that Health Center funding will be subject to three different levels of cuts, resulting in a $167 million reduction in total funding.

Previously NACHC, in consultation with numerous federal budget experts, had concluded that the provision capping cuts to safety net providers at 2.0% would limit the cut to the Health Centers program to roughly $62 million in FY13. This protection language was first placed in the Gramm-Rudman-Hollings Balanced Budget Act in 1986, and the BCA of 2011 included the exact language from the original law. Unfortunately, in this report OMB has now officially determined that this protection only applies to a portion of the Health Center Trust Fund as provided through the Affordable Care Act (ACA), and doesn’t apply at all to our regular annual appropriation. They even carved out the two Health Centers programs that were created after 1986. This means that more than half of total Health Center funding will be subject to a cut well above the 2.0% we had been assured by Congress.

The potential cuts under sequestration will not only limit the planned expansion of Health Centers to meet the health care needs of the newly insured by curbing the growth of the Health Center program, but will also jeopardize the stability of current Health Centers by reducing annual funding for the program.

It is now even more urgent that Congress find a way to avoid the sequester in order to stop these devastating cuts to Health Centers. This agreement should also recognize the value and importance of health centers as Safety Net Providers now and in the future. As Congress continues to consider this issue as January 2nd approaches, we will be calling upon our grassroots advocates to contact your member’s offices regarding the impact of the sequester, and how to truly protect safety net providers going forward. Please stay tuned to Health Centers on the Hill for updates.