Medicare Faqs

What Is Sequestration?
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Sequestration is a government mechanism that involves a series of spending cuts required by the Budget Control Act of 2011, which are aimed at reducing the deficit. Sequestration took place automatically beginning in March 2013 after Congress failed to enact an alternate deficit reduction plan. The required cuts would decrease spending by $1.2 trillion from fiscal year 2013 to fiscal year 2021.

Bipartisan majorities in the House of Representatives and the Senate passed the sequestration cuts in August 2011 to force both parties in Congress to compromise and act to shrink the deficit. The White House Office of Management and Budget (OMB) reported that the across-the-board spending reductions were never intended to actually take place. Despite President Obama signing the Budget Control Act in August 2011, his administration views these cuts as bad policy and has encouraged Congress to avoid them by passing a balanced deficit reduction package.

Sequestration will cause significant harm to U.S. national security, domestic investments and core government functions, according to preliminary estimates from the OMB. The required reductions include a 2 percent cut in Medicare provider payments, which amount to $11.085 billion. The Congressional Budget Office estimates that Medicare budgetary reductions will total $123 billion from 2013 to 2021.    

Related FAQs

How Did We Arrive at Sequestration?

What Does Sequestration Mean to Medicare?

What Part Did Medicare Play in the Fiscal Cliff Discussions?

What Does Medicare Have to Do With the Federal Budget Deficit?

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