'Fiscal cliff' worries Chicago-area health care industry
Some in Chicago’s health care industry are voicing concerns about looming tax hikes and spending cuts that will kick in if Congress and the White House don’t strike a budget deal by the end of the calendar year.
Chicago-area medical research universities and medical device manufacturers could be hit especially hard. That’s only if Washington lawmakers allow the country to go over the so-called “fiscal cliff,” a much-dreaded confluence of tax hikes, automatic across-the-board budget cuts and reductions in Medicare reimbursements that are currently set to take effect Jan. 1.
“It would be pretty bad,” said Rex Chisolm, who oversees all medical research at Northwestern University’s Fineberg School of Medicine.
The school received more than $175 million in funding from the National Institutes of Health, but could lose about 10 percent of that if the across-the-board cuts known as sequestration take effect.
“The people who are funded from that grant, whose salaries are supported by that grant, wouldn’t actually have a way to be paid going forward,” Chisolm said.
Northwestern also gets money from the U.S. Defense and Energy Departments, which are also in for cuts if no deal is reached.
Such deep cuts could put the brakes on research on everything from new medicines to the human genome to prosthetic limbs for returning Iraq and Afghanistan war vets, Chisolm said.
The dean of the University of Chicago’s Pritzker School of Medicine, Dr. Kenneth Polonsky, had similar concerns about job losses. The U of C gets more money from the NIH than any other Illinois medical research institution – more than $185 million this year alone.
But aside from layoffs, Polonsky said he’s concerned about the long-term chilling effect funding cuts could have on medical research.
“The pool of people who are gonna contemplate medical research as a viable career is going to diminish,” Polonsky said. “These are smart young people, and when they see the writing on the wall, they’re gonna choose to do something else.”
The fiscal cliff could also hit medical device makers, which are scheduled to be hit with a new federal excise tax. The tax is part of the new health care law, but coincides with the avalanche of other tax hikes and possible cuts. That worries Will Vogel, president of DeCardy Diecasting, a small Chicago company that makes parts for medical devices.
"Am I gonna invest in my business next year, knowing that the uncertainty is there and basically my customers are telling me they’re gonna be cutting?" Vogel said.