Indiana Faces Millions in Health Care Cuts

March 1, 2013

Indiana hospitals face an additional $844 million in cuts over 10 years under the sequester. Under sequestration, Medicare payments to providers will be cut by two percent. Approximately 16,500 health care and related jobs could be lost in Indiana by 2021 as a result of cuts triggered by the Budget Control Act of 2011.

"Medicare payments are already 50 to 60 percent of most hospitals' revenue and these cuts are on top of the $3.6 billion in cuts already in effect under the Affordable Care Act," said Doug Leonard, IHA president. "The health care sector has long been an economic mainstay providing stability and growth even during times of recession."

During the first year of the sequester, more than 496,000 jobs will be lost nationally, including more than 10,700 in Indiana, according to a report produced by Tripp Umbach, a firm specializing in conducting economic impact studies. The report found that the job losses will affect many economic sectors beyond health care. The Bureau of Labor Statistics data shows that health care created 169,800 jobs in the first half of 2012 and accounted for one out of every five new jobs created last year.

"In many communities throughout Indiana, hospitals are the largest employer as statewide hospitals employ more than 126,000 Hoosiers," said Leonard. "Without policies that would help mitigate these federal cuts on hospitals like expanding coverage, the impact on jobs throughout Indiana could be significant and widespread."

The Tripp Umbach model reflects how reductions in Medicare payment for health care services will lead to direct job losses in the health care sector, reduced purchases by health care entities of goods and services from other businesses, which in turn will lay off workers and reduced household purchases by workers who lose their jobs. As the impact of these cuts ripples through the economy, jobs will be lost across many sectors beyond health care.