What the government shutdown could mean for healthcare

Modern Healthcare – Tuesday, September 30, 2025
By Michael McAuliff

The healthcare sector generally does not have to worry too much about government shutdowns such as the one looming this week, 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 would use fees collected from insurers to sustain the health insurance exchanges created under the Affordable Care Act of 2010 if there’s a shutdown.

Fiscal 2025 ends Sept. 30 but President Donald Trump and the Republican congressional majority have failed to enact appropriations to finance government operations for fiscal 2026. Trump met with GOP and Democratic congressional leaders Monday and talks continue. They have until midnight EST Wednesday to prevent a shutdown.

Democrats refused to accept a short-term spending bill to GOP advanced earlier this month, and are demanding 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.

“We have very large differences on healthcare and on their ability to undo whatever budget we agree to,” Schumer said after the White House meeting. “I think, for the first time, the president heard our objections and heard why we needed a bipartisan bill.”

If no agreement is reached, the federal government cannot spend money on programs subject to annual appropriations starting Wednesday, except on duties deemed be essential, such as protecting life or property, maintaining national defense, or administering mandatory programs.

CMS would 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 expire Wednesday unless Congress acts. 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 a stopgap spending bill Congress passed in March.

Last Wednesday, White Office of Management and Budget Director Russell Vought distributed a memo ordering federal agencies to begin firing people, rather than furloughing them as the government did during previous shutdowns and shutdown threats.

“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 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 would furlough 41% of its nearly 80,000-person workforce if a shutdown begins, not fire employees, it announced Monday.

Nevertheless, the White House has some flexibility to decide what federal functions may continue during shutdowns. Vought was an author of the conservative Heritage Foundation’s Project 2025 plan, which calls for deep cuts to healthcare programs.

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.

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