Unless Congress acts to pass a spending package on or before September 30, the federal government is hurtling toward a shutdown. How will that affect federal healthcare programs?
Stakeholders and policy experts, including former government officials, shared with MedPage Today their forecasts around which health programs and personnel might be most impacted by a shutdown and the kinds of ripple effects patients, providers, and consumers broadly should anticipate.
Effects on HHS and Its Agencies
The Department of Health and Human Services (HHS) released an updated contingency staffing plan last week that provided a breakdown of how many staff would be retained or furloughed, and what functions and activities the agency plans to prioritize.
In the event of a shutdown, 58% of agency employees will be retained and 42% will be furloughed — roughly 51,000 and 37,000, respectively — on day two of what the agency dubbed a “funding hiatus.”
The HHS contingency plan underscored the continuation of the following activities:
- FDA: Drug and medical device application reviews and emergency use authorizations will continue; work on COVID-19 countermeasures and “core functions” related to monitoring and responding to foodborne illness or the flu outbreaks and food and product recalls will also continue.
- NIH: Research and clinical activities will go on, and the NIH Clinical Center — the agency’s biomedical research hospital — will keep providing patient care and admit new patients when medically necessary; also, basic care services to protect the safety of animals will continue, and the agency will retain workers to “safeguard ongoing experiments.”
- CDC: Domestically and internationally, the agency will continue to respond to outbreaks, maintain laboratory functions, and keep the President’s Emergency Plan for AIDS Relief (PEPFAR) program going; the agency will also continue to operate employee compensation programs including the World Trade Center Health Program and the Vaccines for Children program; and will continue to collect data and report data centered around tracking, preventing, and treating disease.
- Centers for Medicare and Medicaid Services (CMS): Funding for Medicaid is sufficient to fund the first quarter of fiscal year 2024 due to advanced appropriations; staff will be retained to continue payments to states for the Children’s Health Insurance Program (CHIP); and eligibility verification and other activities related to the Affordable Care Act’s federally run insurance exchange will continue.
- Administration for Strategic Preparedness and Response: This agency will “maintain the minimal readiness for all hazards, including COVID-19, pandemic flu, and hurricane response,” according to HHS.
- HHS: The agency itself will retain a “limited number of staff” to support funded activities including payments for Medicaid, Medicare, and other mandatory programs.
Meanwhile, the White House warned in a press release on Monday that a government shutdown could leave 7 million mothers and children who rely on nutritional assistance from the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) without benefits. The administration painted a picture of mothers and children “turned away at grocery store counters” and placed the blame squarely on the shoulders of “extreme House Republicans” unwilling to do the bipartisan work needed to keep the government open.
However, the degree of concern from policy experts varied. “My sense, in general, is that patients and those who care for them are probably going to be only modestly directly impacted by a shutdown, especially if it doesn’t last too long,” said Jeremy Sharp, managing director at Waxman, a health policy consulting firm. Sharp, who is also a former FDA deputy commissioner, said he’s somewhat reassured by the “safety of human life” exceptions in the rules.
Importantly, Medicare and Medicaid operate under mandatory funding and the Indian Health Service was pre-funded through fiscal year 2024, he noted, adding that “hiccups” in payment are still possible given that even while the key staff involved in running a program may be working, it’s possible the person at the Treasury Department responsible for mailing those checks out is not.
Community health centers, which are funded both through mandatory funding and the regular appropriations processes, are another area of concern, according to Sharp. Community health centers’ mandatory funding also expires this fiscal year. “The bigger community health centers that have more stable funding are going to be able to ride this out better than the smaller ones,” Sharp predicted.
Weighing ‘Imminent Risk’
Ironically, the agencies that he’s most concerned about are also the ones likely to retain the most staff, Sharp said.
Take, for example, the CDC. At that agency, 41% of staff will be retained, compared with 22% of staff at the NIH. However, that still means that 59% of the CDC staff will be furloughed, and he characterized the CDC as one agency “where we can least tolerate a breakdown of operations…. So when you take a sizable chunk of their staff [away], that’s, in my mind, a slightly greater imminent risk” to public health and safety. While disease surveillance will be ongoing, Sharp said “there will be probably fewer staff trying to make that work, and so there’s a greater chance of failure to carry out the mission.”
Health promotion activities, such as smoking prevention, are also likely to be sidelined because while there are long-term impacts on health and safety, whether there’s “imminent risk” is unclear, he said.
At CMS, Sharp says he can see “disruptions” for physicians, hospitals, and nursing homes, as well as those paid by the agency, if “expected” staffing levels aren’t maintained.
Steve Grossman, executive director for the Alliance for a Stronger FDA, weighed the impacts of a shutdown on the FDA in particular. Anyone who doesn’t see the threat there as very serious is forgetting just how many areas of their daily life that agency influences, and that the agency has no “spare capacity” to begin with, he said. For example, in terms of food safety, “when you have less than a full staff in an understaffed function, it’s not so much that the food becomes less safe, but the risk increases.”
While “for cause” and surveillance inspections will continue, the status of routine inspections is less clear, because agency documents aren’t “granular” enough to clarify precisely which functions are staffed and which aren’t, said Grossman, adding that the alliance also remains concerned about the agency being able to maintain its role in product innovation.
User fee monies pay for some activities, but not all, he said. “For those who are looking for treatments and cures, any slowdown is problematic.”
Finally, a shutdown can also understandably impact staff morale and attrition, Sharp said. “If you’re in a job where every year there’s the risk that you may have to work for a few days to a few weeks to a few months without pay, or even if you’re being sent home and furloughed but you still don’t get pay, you start to think about [whether] that’s the job you want to have.”
NIH Concerns ‘Overblown’
Joseph Grogan, JD, a nonresident senior fellow at the University of Southern California Schaeffer Center in Los Angeles, argued that the public will see “very little effect” from a shutdown. However, the longer workers aren’t paid, the worse customer service could become, said Grogan, who also served as director of the Domestic Policy Council during the Trump administration.
Similarly, in terms of the government’s COVID response, if a shutdown does occur, he said he expects a lag in some administrative activities that would exacerbate reimbursement problems and communication with private industry. And in an email to MedPage Today, Grogan predicted that the kinds of “snafus” seen during the recent rollout of COVID vaccines could increase and take longer to resolve.
With regard to the NIH, Grogan said disbursements of research funds could be delayed, but stressed that “concerns about major setbacks in the biomedical research enterprise are overblown.”
“Bottom line: I don’t think people will notice this unless the shutdown extends beyond 30 days,” he added. “Federal agencies have been through this drill before and they know how to manage it.”