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Report: Budget cuts could cost thousands of Arizona healthcare jobs

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WASHINGTON – Arizona could lose more than 9,800 health-care and other jobs next year if a 2 percent cut in Medicare takes effect Jan. 2 as part of the $1.2 trillion federal budget “sequestration,” a new report claims.

Job losses nationally could approach 500,000, according to the study that was done for national associations representing doctors, nurses and hospitals. It said the job losses in Arizona would grow from 9,863 in 2013 to 15,324 by 2021 attributable to Medicare cuts.

Losses of that magnitude are “very significant,” said Pete Wertheim, spokesman for the Arizona Hospital and Healthcare Association. He said Arizona hospitals currently employ more than 80,000 people.

“Health care has been one of the bright spots during the recession,” Wertheim said. “But we have been in contraction recently due to Medicaid cuts.”

Besides affecting the quality of care, health-care workers in the state worry that a 2 percent cut in Medicare funding, on top of recent Medicaid cuts, could hit patients in the pocketbook.

“We have a problem already with high costs,” said Robin Schaeffer, executive director of the Arizona Nurses Association. “We get concerned about the cuts because of the quality of care. The whole message is a short-sighted step.”

The health-care industry is the most recent to predict dire consequences from the budget sequester, automatic federal budget cuts of $1.2 trillion over 10 years that are scheduled to take effect Jan. 2.

The cuts were designed to be harsh: They were supposed to prod Congress into agreeing to their own budget-cutting plan last year. But lawmakers could not reach agreement and the clock started toward the sequestration at the start of 2013.

Half of the cuts would come from the defense budget and half from domestic programs, including Medicare spending. In a report on the impact of sequestration Friday, the White House called the sequester “a blunt and indiscriminate” budget-cutting instrument.

The House on Thursday voted to maintain Defense Department spending, while leaving the prescribed discretionary spending cuts in place for the sequester.  But the Office of Management and Budget has already said it would recommend that President Barack Obama veto the bill to preserve Pentagon spending if it should pass the Senate.

Phoenix Mayor Greg Stanton, who has lobbied against the draconian cuts called for in the sequester, said Congress needs to take a balanced approach to the budget.

“I don’t think they should separate defense and non-defense cuts,” Stanton said. “Doing so is not appropriate.”

If Congress cannot agree to a budget and the sequestration is allowed to take effect, Stanton said, “It will lead us back into a recession.” That is because in addition to health care, Arizona would also lose education, science and employment services jobs, he said.

The health-care cuts would be hitting one of the few bright spots in the Arizona economy in recent years.

“While the Arizona economy was losing jobs in 2008, 2009, 2010, the health-care industry in the state added jobs each year,” said Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W.P. Carey School of Business.

“Health-care cutbacks would result not only in job losses but a reduction in quality of services for Arizona residents,” said McPheters, who said that “under reasonable assumptions” he would expect one job lost in other industries for every health-care job lost.

Chic Older, executive director of the Arizona Medical Association, said the state was able to keep health-care jobs during the recession because even during a recession people still get sick. The threat of cuts to Medicare is different though.

“With Medicare cuts come cutbacks out of necessity,” Older said. “The biggest worry should be our society and whether there will be care we can afford.”

While Older has not seen the report, he cautioned that such numbers typically involve a decent amount of speculation. But he added that the threat of Medicare cuts have been going on for years and, as a result, he does not know any physicians that see Medicare as a means for maintaining a financially sound medical practice.

“Many say, ‘I want to take care of these patients, they were my patients before Medicare.But can I sustain my practice by taking care of them and taking new Medicare patients?’” Older said.

Wertheim said Medicare cuts are particularly troublesome for Arizona because of the large senior population and subsequently significant number of Medicare patients. The Census Bureau said Arizona had 899,000 Medicare enrollees in 2009.

“When you have Medicare cuts and I’m a primary provider, I can choose not to take Medicare anymore,” Wertheim said. “That is a trend that has been growing for some time. Hospitals will take patients regardless of how they’re paying, but that is different in a community with specialists that deal with elderly and they discontinue taking Medicare patients.”

Stanton said he does not understand how Congress would “let America go off a financial cliff.”

“The sequester shouldn’t happen and it can’t happen,” he said. “Our demand, not a request, is that Congress get back to work and reach a reasonable solution.

“This would be devastating to our health-care system,” Stanton said. “We are lucky to have so many large health-care facilities and high paying jobs.”