The Congressional Research Services (CRS) published a report for Congress on October 17, 2011 entitled, “Budget Control Act: Potential Impact of Automatic Spending Reduction Procedures on Health Reform.”  Enacted on August, 2, 2011, the Budget Control Act of 2011 (BCA; P.L. 112-25) establishes a process for reducing the federal deficit by at least $2.1 trillion over the 10-year period FY2012-FY2021.  The spending reductions would be achieved by “lowering caps on discretionary spending [FY2014-FY2021] and by an automatic across-the-board cancellation of budgetary resources (i.e., spending cuts) for nonexempt direct spending programs—a process known as sequestration [starting in FY 2013].”

Spending reductions triggered by the BCA on health reform spending under PPACA would be limited.  Under the sequestration rules, Medicaid spending would be exempt from reductions, and cuts to Medicare, Community Health Centers and Indian Health Service would be capped at 2% for each program.

The report explains that the mandatory appropriations in PPACA in support of increased insurance coverage “would, in general, be subject to direct spending reductions under a sequestration order.  However, for any given fiscal year in which sequestration was ordered, only new budget authority for that year (including advance appropriations that first become available for obligation that year) would be [subject to reductions].  Unobligated balances carried over from previous fiscal years would be exempt from sequestration.”

The report is available by clicking here.