March 5, 2013—The Health Resources and Services Administration (HRSA) will have its funding reduced by $605 million for the seven months remaining in fiscal 2013 after Congress and the White House failed to prevent government-wide automatic cuts from taking effect. The effects on the 340B drug discount program, if any, are not yet clear.[ms-protect-content id=”2799″]
President Obama signed a sequestration order on March 1 cancelling $85 billion in spending this year. During the 2011 standoff over the raising of the federal debt ceiling, the President and Congress agreed that if they could not reach a deficit reduction agreement by the end of 2012, about $1.2 trillion in across-the-board cuts over nine years would automatically kick in.
According to the Office of Management and Budget (OMB), the sequestration, if spread out over 12 months, requires a 5.0 percent reduction in most forms of discretionary domestic spending (and a 7.8 percent reduction in comparable defense spending). Because there are only seven months left in fiscal 2013, the effective percentage reduction for most domestic programs is 9.0 percent.
OMB spending-cut projections released on March 4 drilled down to the HRSA level of the Department of Health and Human Services (HHS) but no deeper. HRSA’s Office of Pharmacy Affairs (OPA), which administers the 340B program, is currently being funded at the $4.48 million level under a continuing resolution that expires at the end of this month. House Appropriations Committee Chairman Hal Rogers (R-Ky.) introduced a new continuing resolution yesterday that would extend funding for HHS and most other government agencies for the rest of fiscal 2013 at last year’s levels but subject to the sequestration cuts.
If OPA’s annual funding level remains steady and the sequestration remains in place, it would lose about a quarter-million dollars, all concentrated in the last seven months of the fiscal year.
Community health centers are expected to experience a $120 loss in HRSA grant funding this year under the sequestration, according to a study by researchers at The George Washington University School of Public Health and Health Services.
Medicaid, the Children’s Health Insurance Program, and the Medicare Part D drug benefit’s low-income premium and cost-sharing subsidies are exempt from sequestration. Medicare payments for hospitals and other health care providers will be cut by 2 percent.[/ms-protect-content]