Source: Modern Healthcare
Key Takeaways:
- The federal government shut down at midnight EST Wednesday.
- Medicare and Medicaid are mandatory programs and not subject to shutdowns.
- The Health and Human Services Department will furlough 41% of its workforce.
The healthcare sector generally does not have to worry too much about government shutdowns such as the one that commenced Wednesday, beyond dealing with a less efficient bureaucracy and possible reimbursement delays.
Healthcare providers and health insurance companies tend to mostly be insulated from the consequences of shutdowns because the key programs that pay them continue running even when other federal activities cease.
Medicare, Medicaid and the Children’s Health Insurance program operate with mandatory funding not subject to annual appropriations. And the Centers for Medicare and Medicaid Services announced Monday that it will use fees collected from insurers during a shutdown to sustain the health insurance exchanges created under the Affordable Care Act of 2010.
Related: Government shutdown begins with Trump, Democrats at impasse
Fiscal 2026 began at midnight EST Wednesday but President Donald Trump and the Republican congressional majority failed to enact appropriations to finance government operations in time. Democrats opposed a stopgap spending bill the GOP advanced this month, and demanded a permanent extension of enhanced subsidies for exchange enrollees and the restoration of some of the $1.1 trillion in healthcare cuts included in Trump’s tax law.
During the shutdown, the federal government cannot spend money on programs subject to annual appropriations, except on duties deemed be essential, such as protecting life or property, maintaining national defense, or administering mandatory programs.
CMS will suspend or reduce activities such as healthcare facility surveys and certifications, new policy and regulation announcements, and most oversight, outreach, education, and beneficiary casework actions, according to the contingency plan the agency released Monday.
Unrelated to annual appropriations, the legal authorities for key healthcare programs also expired Wednesday. That includes Medicare reimbursements for telehealth and hospital-at-home services and some Medicare payment boosts for financially strapped hospitals.
Despite that degree of relative stability, some observers believe Trump may seize on a shutdown to ramp up his efforts to make large, sweeping cuts to federal departments and programs.
“If there are places where the president’s proposed cuts, I’m anticipating he’s going to use this as an opportunity to start implementing those cuts,” said Jonathan Burks, executive vice president for economic and health policy at the Bipartisan Policy Center. “I think that’s a real challenge to patients and providers.”
That same concern was a major reason Senate Majority Leader Chuck Schumer (D-N.Y.) sought to avoid a shutdown by throwing his support behind the short-term spending bill Congress passed in March.
White Office of Management and Budget Director Russell Vought distributed a memo last week ordering federal agencies to begin firing people, rather than furloughing them as the government did during previous shutdowns.
“This is an attempt at intimidation. Donald Trump has been firing federal workers since day one — not to govern, but to scare,” Schumer said in a news release last Thursday. “These unnecessary firings will either be overturned in court or the administration will end up hiring the workers back, just like they did as recently as today.”
The Health and Human Services Department will furlough 41% of its nearly 80,000-person workforce, not fire employees, it announced Monday. That includes CMS’ plan to furlough 53% of its 6,200 workers.
Nevertheless, the White House has some flexibility to decide what federal functions may continue during shutdowns and the OMB has declared that firing government employees is an “excepted activity” that can continue during a shutdown. The American Federation of Government Employees and the American Federation of State, County and Municipal Employees sued Tuesday to block any mass firings during the shutdown.
The White House “can trim the budget to a level that you couldn’t do any other way,” Trump said Tuesday. “We can do things during the shutdown that are irreversible, that are bad for them and irreversible by them, like cutting vast numbers of people out, cutting things that they like, cutting programs that they like.”
Vought was an author of the conservative Heritage Foundation’s Project 2025 plan, which calls for deep cuts to healthcare programs and the federal workforce. The Trump administration may choose to further those objectives during a shutdown, said David Kendall, the senior fellow for health and fiscal policy at Third Way, a centrist think tank.
“That could be something they could come after: Make it harder for people to enroll, and make it even more difficult in Medicaid for people to do an enrollment there,” Kendall said.
