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Report: Projected Medicare cuts mean huge job losses


As many as 766,000 healthcare and related jobs could be lost by 2021 as a result of the 2% reduction in Medicare spending mandated by the Budget Control Act of 2011, according to a report released by the American Hospital Association, American Medical Association and American Nurses Association.

The report, produced by Tripp Umbach, a firm that specializes in conducting economic impact studies, measures the anticipated effects of these cuts in Medicare payments on healthcare providers and other industries. The model reflects how reductions in Medicare payment for healthcare services will lead to direct job losses in the healthcare sector; reduced purchases by healthcare 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.

An estimated 496,000 jobs will be lost during the first year of the automatic cuts, which are scheduled to start in 2013. As the impact ripples through the economy, jobs will be lost across many sectors beyond healthcare, according to the report.

“Hospitals’ ability to maintain the kind of access to services that their communities need is being threatened,” AHA President and CEO Rich Umbdenstock said in a news release. “Cuts to hospital services could create devastating job losses in communities where hospitals have long been an economic mainstay.”

The report did not seek to quantify the impact of the projected job losses on care quality and access, but the effect could be profound.

“Nurses have always strived to put patients at the center of a healthcare system that emphasizes prevention, wellness and coordination of care — the kinds of services that experts agree are essential to not only improving the health status of patients, but also lowering overall healthcare costs,” said Cindy R. Balkstra, RN, MS, CNS-BC, ANA first vice president. “Cutting Medicare spending in a way that eliminates healthcare jobs is an extremely short-sighted way to contain the high cost of healthcare.”

According to the agreement reached last year to raise the federal debt limit, Medicare and defense spending must be reduced. The Medicare cuts, which will be in effect from 2013 through 2021, would be in the form of reductions to provider payments. People enrolled in Medicare would not lose any amount of benefits.

A PDF of the report is available:


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