Journal of Medicine - The mandatory budget cuts, or sequestration, invented as part of the debt limit law last year, goes into effect on January 2, 2013 if Congress doesn't pass an alternative.  The "Budget Control Act of 2011" calls for automatic spending cuts of $1.2 trillion over 10 years, half from the military and half from domestic programs. This amounts to fiscal 2013 cuts of $109 billion,  $54.7 billion per year in defense and $54.7 billion per year in domestic programs.  It includes an $11 billion cut, or 2 percent, from Medicare, that would fall on providers.

A new report produced by Tripp Umback, a firm specializing in economic impact studies measured the anticipated effect of these cuts in Medicare payments on health care providers and other industries.  They found that nationally, more than 766,000 jobs would be lost over the 10 year sequester, with 496,000 jobs lost the first year, according to the report.  

A two percent sequester of Medicare spending shows that reductions in Medicare payments 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 ripple through the economy, jobs will be lost across many sectors beyond health care.

The health care sector 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.