Parsing the Health Impacts of the Government Shutdown
At present, there’s no end in sight.
Authors: Nick Bath and Katie Rubinger
Editors: Patti Boozang and Amanda Eisenberg
tl;dr
We are on day 17 of a government shutdown after Congress failed to pass a government spending resolution. Deep partisan divisions persist over spending levels and health policy priorities – especially expiration of enhanced advanced premium tax credits.
Across federal agencies, government functions have been paused if they are funded by discretionary spending, and many policymaking activities have been put on the backburner.
Congress remains stymied despite the White House pressuring Congressional Democrats into negotiating by carrying out widespread reductions in force (RIFs) among furloughed federal workers.
The 80 Million Impact
The Senate has now voted 10 times on the House-passed continuing resolution (CR) to provide short-term government funding. To succeed, any spending bill in the Senate needs seven Democratic votes to proceed. The deadlock seems unlikely to break anytime soon since both sides see the shutdown as “working in their favor.”
Democrats have been unified in demanding an extension of the enhanced advanced premium tax credits for ACA Marketplace coverage as a component of any deal to reopen the government. Republicans continue to argue that any negotiation over that extension can occur only once the government reopens, and such a policy could be considered through “regular order” including Congressional committee hearings and markups in both chambers.
Throwing everything up against the wall
Sen. Majority Leader John Thune (R-SD) is set to try a different strategy later this week: advancing individual appropriations bills that have already been approved by the Senate Appropriations Committee. Indeed, the Senate may vote as soon as tomorrow on a procedural motion to consider the House-passed Department of Defense appropriations bill. The leader’s hope is that, by showing a path forward for bills with strong bipartisan support, the opposition of at least some Democrats will soften — especially those who have priorities in those bills. However, Sen. Patty Murray (D-WA), the ranking Democrat on the Senate Appropriations Committee, said she told House Speaker Mike Johnson that appropriations bills would only be considered as part of a broader negotiation that includes extension of the tax credits.
Medicaid is protected — for now
Medicaid funding to states generally keeps flowing during a government shutdown, since Medicaid is an entitlement that’s unaffected by the appropriations process. However, if this shutdown reaches historic length, these protections may diminish. Medicaid funding for the first quarter of fiscal year (FY) 2026 has already been appropriated, though if the shutdown stretches beyond that, federal payments to states will stop and employees will begin to be furloughed unless funds are left over from the first quarter appropriation. This has never occurred, but with speculation that the shutdown could stretch until Thanksgiving, states may need to pivot to contingency planning.
The government writ large may look very different when it reopens
Prior to the shutdown itself, the White House Office of Management and Budget (OMB) issued a memo directing federal agency heads to compile reduction in force (RIF) plans for employees likely to be furloughed and without an alternative source of funding. On Oct. 10, OMB Director Russell Vought tweeted that “The RIFs have begun.” Across the federal government, more than 4,000 employees received RIF notices, including a number of employees at the Centers for Disease Control and Prevention (CDC) and Substance Abuse and Mental Health Services Administration. At CDC, for instance, the entire staff of the Washington office — responsible for liaising with policymakers on Capitol Hill — received pink slips. Without any clear data from Department of Health and Human Services or OMB, the full scope of the RIFs is unclear.
A federal judge in California temporarily blocked the RIFs from going into effect, but Vought has doubled down on his intent to take advantage of the shutdown to reorder the federal bureaucracy. Indeed, Vought has indicated that total shutdown-related RIFs could exceed 10,000 federal employees when all is said and done. The Centers for Medicare and Medicaid Services and Food and Drug Administration employees were exempted from this most recent first round of RIFs, but it remains unclear how they may fare in future ones.
The Bottom Line
During a shutdown, states, providers and enrollees can feel generally secure that federal funding for services provided through Medicaid will continue. However, the longer the shutdown stretches — and the deeper OMB goes in executing its RIF plans — the less certain many of these “essential” government functions may become.