A new report shows that nearly 8,500 health care and related jobs could be lost in Iowa by 2021 as a result of the 2 percent sequester of Medicare spending mandated by the Budget Control Act of 2011.  Nationally, more than 766,000 jobs would be lost according to the report released today by the American Hospital Association, American Medical Association and American Nurses Association.  Most of the job losses would occur within the next year if the cuts move forward.

Based on analysis of the Congressional Budget Office Medicare baseline, the Medicare cuts that will occur from this sequester will grow from an estimated $10.7 billion in 2013 to $16.4 billion in 2021. It is important to note that this cut will not impact the benefits received by enrollees, but rather, will be accomplished by reducing payments for health care services.

The report, produced by Tripp Umbach, a firm specializing in conducting economic impact studies, measures the anticipated effect of these cuts in Medicare payments on health care providers and other industries.  The Tripp Umbach model reflects how reductions in Medicare payment for health care services will lead to direct job losses in the health care sector, reduced purchases by health care entities of goods and services from other businesses, which in turn will lay-off workers, and reduced household purchases by workers who lose their jobs.  As the impact of these cuts ripples through the economy, jobs will be lost across many sectors beyond health care.

This model estimates that, during the first year of the sequester, more than 496,000 U.S. jobs will be lost, including nearly 5,500 in Iowa.  The report found that the job losses will affect many economic sectors beyond health care.

The health care sector, which represents 18 percent of the U.S. economy, has long been an economic mainstay providing stability and growth even during times of recession.  The Bureau of Labor Statistics data shows that health care created 169,800 jobs in the first half of 2012 and accounted for one out of every five new jobs created this year.

In Iowa, more than 70,000 people work in hospitals, which provide a statewide economic impact of $6.1 billion.  Iowa’s health care sector employs nearly 195,000 people and has an economic impact of $14.7 billion.