This article first appeared in the St. Louis Beacon, March 1, 2013 - St. Louis area residents may not know the meaning of sequestration, but they may soon feel its impact through a loss of federal dollars for programs ranging from home-delivered meals for the elderly to vital research at area universities and other institutions.
Those are among the potential consequences of sequestration, Washington jargon for across-the-board budget cuts, beginning tomorrow, unless Congress and the White House find an alternative to the indiscriminate spending reductions now mandated under federal law.
The possibility of automatic cuts in an array of federal programs supporting academic research is probably an issue that Dr. Evan Kharasch didn’t expect to have to grapple with after being appointed vice chancellor for research at Washington University in 2010.
“Without a doubt the greatest consequence is the tremendous uncertainty that this (sequestration) is creating,” Kharasch says. “In light of the significant amount of uncertainty, institutional planning is difficult.”
The university’s research budget last year was about $620 million, with 77 percent of it coming from federal sources. Most of the federal dollars came from the National Institutes of Health and a smaller percentage from the National Science Foundation. The money supports research ranging from cancer, heart and neurological diseases to engineering and technology.
“But not all of that (research money) is susceptible to sequestration cuts,” Kharasch says. The cuts are expected to affect 5 percent of spending to the university from various funding agencies.
Under sequestration rules, “the guidance that has been issued by the White House is that each of the agencies will be implementing cuts. But they haven’t told institutions which programs they might cut or downsize. They have only just started to discuss how they might implement those cuts. And really until we have those numbers, that’s a very difficult question to answer or to predict.”
Sequestration might affect federal funding for other research institutions, such as the Danforth Plant Science Center. Most of these institutions, including St. Louis University, said they are awaiting guidance from federal agencies that provide the funding. They all note that this issue is different from a government shutdown, in that sequestration doesn’t affect every federal dollar the institutions receive.
Elderly and homeless might be hurt
Agreeing with that assessment is William Siedhoff, director of St. Louis' Department of Human Services. He points to sequestration’s potential for interrupting home-delivered meals on weekdays to about 2,400 city residents.
“If this happens, we’d have to have something other than a daily kind of meal delivery,” he says. He adds that sequestration would unravel a safety net that goes beyond meals.
“The meals program is so critical for reasons beyond food. It helps to keep people out of nursing homes. But many of our seniors are homebound, with no family, no relatives. They are living on their own and don’t have anybody to really give them the kind of support that they need.”
In some instances, he says, people delivering meals “might discover that an elderly resident has been injured as a result of a fall or some other bad situation has occurred in their homes. That’s another reason this meals program plays a very important role.”
He notes that the city also has a registry through which city workers and others call and check on homebound people during storms and other situations. “But the meals program is the best program we have in place to address the well-being of seniors.”
He says the sequestration issue is heating up just as the city has received a federal grant for an ambitious program to end chronic homelessness. That effort involves federal funding for both housing and what’s known as wraparound services to stabilize the homeless, he says.
The services include providing the homeless with case managers, along with drug, health and mental-health treatment, where needed “so that people who are placed in housing are able to stay there rather than end up back on the street. It’s exactly what we did about the homeless problem on the riverfront. We had to provide a lot more than providing housing for the victims. We intend to do the same for the 138 people regarded as the chronic homeless in the city.”
That’s assuming sequestration doesn’t stand in the way at a later date. “We don’t want anything to interfere with our efforts to try to move ahead to be No. 1 among cities in ending chronic homelessness,” he says. “Of course any kind of reduction in resources is going to have an impact.”
Hospitals brace for cumulative cuts
Area hospitals will be adversely affected if sequestration isn't prevented, says Dave Dillon, spokesman for the Missouri Hospital Association. The statewide total for hospital-related sequestration is $620 million between 2013 and 2019, he says, stressing that individual member hospitals will have decide on their own how to respond to this issue.
“These reductions could be made in the hospital labor force or in capital investment or cost shifted to individuals with commercial insurance,” he says.
The biggest challenge, he adds, is the cumulative nature of a series of federal cuts to hospital budgets. Besides the sequestration of $620 million, he says, Medicare reimbursements are expected to be cut by $235 million over a 10-year period. Beyond that, the Affordable Care Act is cutting hospital Medicare payments by nearly $2.7 billion between 2013 and 2019. Finally, he notes, the ACA is reducing disproportionate share hospital payments over 10 years.
“The cumulative impact is devastating,” Dillon says. “That’s why we’re pushing so hard for Medicaid reform.” By reform, he means expanding Medicaid to provide insurance for more Missourians who otherwise might have been helped by disproportionate share hospital payments that the federal government is phasing out.
He says Missouri hospitals provided $1.1 billion in uncompensated care in 2011 but believes that level of spending for charity care and bad debt “is not sustainable with all the cuts, especially if we fail to move the Medicaid (expansion) bill.”
Dillon adds that the overall size of the cuts means that “this problem is too large to cost shift to commercial payers. As a result, the cuts will have an impact on the services we provide."
However sequestration plays out, many of those affected probably would agree with the assessment from WU's Kharasch: “These kinds of cuts and the way they are being made are not necessarily in everybody’s best interest.”
