Nothing New: Sequestration Poses Serious Risk to Public Health

By Peter Kyriacopoulos, Senior Director of Public Policy, APHL

Congress’ frustration over its inability to effectively manage federal spending and the impact of that spending on the deficit is nothing new. The concept of imposing an automatic across-the-board spending cut once spending exceeded specific caps is nothing new. Designing this sequestration or automatic cut mechanism in such a way to encourage Congress to make appropriate decisions by providing an option that was deemed to be so objectionable that Congress would never let it occur is nothing new. Sequestration was part of the Balanced Budget and Emergency Deficit Control Act of 1985 – 26 years before the enactment of the Budget Control Act (BCA) of 2011. That law was primarily the product of three U.S. Senators: Phil Gramm, Warren Rudman and Ernest Hollings and is often referred to as Gramm-Rudman-Hollings.

In its most recent guise, as a condition for increasing the federal debt ceiling in 2011, Congress and the President agreed on the mechanics of the BCA which resurrected the Gramm-Rudman-Hollings concepts of spending caps and automatic cuts. The approaching January 2, 2013 deadline is generating considerable interest in the automatic cuts that begin on that date. One thing new included in the BCA is the creation of a special Congressional committee that was directed to produce legislation that would further reduce the federal debt by $1.2 trillion, or automatic cuts of the same amount would occur.

The BCA automatic cuts were designed to be so punitive and unacceptable that Congress would take definitive action to prevent them from ever happening – nothing new. The special Congressional committee was not able to reach agreement and produce an alternative proposal which has led to the likely imposition of the automatic cuts on January 2.

Because of this increased interest in the automatic cuts, most have forgotten the almost $1 trillion in federal spending reductions between 2012 and 2022 that are already being implemented through the spending caps included in the BCA. These caps reduced federal spending $62 billion in fiscal year 2013 and have created downward spending pressure on all federal agencies, including the Centers for Disease Control and Prevention (CDC) which supports the state and local governmental public health laboratories.

Beyond the current impact of the caps, the automatic cuts in federal spending will cause spending in fiscal year 2013 to be reduced by an additional $110 billion. These automatic cuts, will cause a $31 billion cut in domestic programs – like those operated by CDC – in fiscal year 2013 starting on January 2. There are many numbers being used to measure the size of this spending reduction, and it is not unreasonable to presume they will amount to a 10% reduction.

A reduction of this size in CDC’s funding for the governmental public health laboratory system will hit direct support for the system through the Epidemiology and Laboratory Capacity (ELC) program and through the Public Health Emergency Preparedness (PHEP) cooperative agreement; combined, these programs provide in excess of $100 million annually in direct laboratory support and a reduction on the order of $10 million will dramatically reduce the surveillance and detection capability of the laboratory system. This is before determining the amount of indirect spending by CDC on behalf of the laboratory system, which will likely be very similar.

A possible silver lining could be the timing of the PHEP and ELC grant awards, as both awards are scheduled for release later in the 2013 calendar year – conceivably giving Congress sufficient time to produce an alternative that stops the automatic cuts.

The ELC and PHEP grants are not the sole source of CDC’s direct and indirect work with the governmental public health laboratory system which includes collaborative work on newborn screening, environmental health, tuberculosis and HIV/AIDS. All of this work improves the public’s health and leads to better individual health outcomes and reduced health care expenditures by both public sector and private sector payers. It is unconscionable that the activities of CDC and its state and local governmental health laboratory partners is put being put at risk while Congress attempts to craft a solution to the size of the federal deficit. It is also reminiscent of another piece of history involving fiddles and Rome – nothing new.