The Sequester Will Affect Insurance

cut up moneyThe sequester will cause a bunch of automatic funding cuts to programs that help thousands of Americans, beginning on March 1, 2013. This can only be prevented if Congress manages to come to an agreement about how to stop it from happening. At the time I am writing this blog, that agreement does not appear to be likely. Here’s how the sequester will affect the insurance that covers you and your family.

Unemployment Insurance Benefits

People who are laid off, who worked for companies that went bankrupt and closed, or who lost their jobs through no fault of their own receive unemployment insurance benefits. The amount is nowhere near what they used to make at work, but can help a family to buy groceries or to pay a bill or two.

According to, there are currently about 2 million people who receive federal unemployment benefits. If the sequester is not prevented, long-term unemployed workers will see their benefits reduced by 9.4% or more through the remainder of the fiscal year (which lasts through September 30, 2013). The example given is this: A person who receives an average weekly benefit of $300 would see it reduced by $33 a week or $132 a month.

Medicare is a public form of health insurance that covers people who are age 65 or older. It also covers people (of any age) who have End Stage Renal Disease. Medicare also covers people who are younger than age 65 and who have certain types of disabilities.

If the sequester happens, it will cause a 2% payment reduction to Medicare providers and insurers for services provided after April 1, 2013. This information comes from the Department of Health and Human Services, (according to Every time there is a cut to the payment reimbursement rate for Medicare, there is reason to worry that it will result in fewer health care providers who are willing to see patients who are covered by Medicare.

According to the Bipartisan Policy Center the sequester will cause automatic Defense cuts and and Non-Defense Cuts. Medicare is under the second category, and stands to be cut by 2%, (which equates to $122 billion).

Private Health Insurance
This part hasn’t been talked about much, but you can see it clearly in the information provided by the Bipartisan Policy Center. One of the cuts will be to the PPACA Exchange Subsidy.

PPACA stands for the Patient Protection and Affordable Care Act. Kaiser Family Foundation describes the exchange subsidy as a premium tax credit that will be provided to individuals who are low-income for the purpose of making it possible for them to buy private health insurance through the exchanges. If the sequester happens, the Bipartisan Policy Center says that $7 billion will be cut from the funding for the tax credit that could be what enables your family to afford health insurance coverage when the exchanges are ready in October of this year.

Image by Tax Credits on Flickr