Fred Mogul, Reporter, WNYC News
Fred Mogul has been covering healthcare and medicine for WNYC since 2002.
If automatic spending cuts poised to kick in at midnight Thursday, $85 billion will come out of the federal budget – and healthcare, in particular hospitals, will get a larger slice of those cuts than any sector other than the military.
But things will be much worse for some hospitals than others.
Bigger ones that receive more federal money, of course, would lose more than small ones. But it’s the academic medical centers where research is conducted that would see the largest exodus of funding. They get the lion’s share of their research money from the National Institutes of Health, which has been targeted for cuts, with the exact size to be determined.
Mt. Sinai Medical Center receives around $225 million from the NIH and other sources. Officials are bracing for around 5-to-8 percent, which would translate into a $12-to-18 million funding drop for medical research.
“We don’t know yet exactly how it will be administered, whether they’ll decrease the number of new grants they give out or substantially alter the grant awards they’ve already made” said Dr. Kenneth Davis, the president and CEO of Mt. Sinai.
Across-the-board cuts would lead to lay-offs, he said.
“The scientists running those grants will have to let people go. There’s just no way they’re going to be able to meet their budgets without cutting staff,” he said. “There’ll be reductions in the volume of science that is done and the number of people that are employed, the papers that are published and the results that will be obtained.”
Mt. Sinai is one of several local institutions that regularly receive millions of dollars from charitable foundations and private philanthropists. Its medical school is named after financier Carl Icahn, but Davis said donors don’t give to fill budget shortfalls.
“No one sits down and says, ‘We’re gonna give you a gap $25 million, so that your scientists can be funded at the same level they were,” Davis said. “Philanthropists don’t think tnat way. They think about longer-term commitments, about areas they’re particularly interested in.”
In addition to the research funding cuts, Mt. Sinai and other hospitals are also facing cuts in the rates the federal government pays for medical treatment through the Medicare program. These cuts are also vague at the moment – they wouldn’t take effect until April 1 – but they are presumed to be relatively small, most likely around 2 percent.
This isn’t nearly as steep as it could be for hospitals.
President Obama had put on the table $400 billion in health care cuts, mainly from Medicare. And Republicans wanted more.
"What people were really worried about was the prospect of a huge deficit bill that could target Medicare for $400 billion or $500 billion," said John Rother, president of the National Coalition on Health Care, an umbrella group that includes service providers.
"The health care industry fears the alternative more than they fear a predictable reduction in rates," said Dan Mendelson, president of Avalere Health, a market analysis firm. "They just do not want to roll the dice. That is why you do not hear as much of an outcry on Medicare."
The health care portion of the automatic spending cuts was designed to try to avoid pain for individuals and families. Medicaid, the health care program for the poor, was exempted, as were the biggest subsidies under Obama's health care law, which starting next year will help uninsured people pay premiums.
The Associated Press contributed to this report.