Government enters shutdown amid health care and funding clash

The government shut down at midnight Tuesday night, after Congress failed to strike a deal.

Reminder: Funding for the federal government ran out after Sept. 30. Congress needs to pass a new spending bill to reopen the government. Democrats are demanding that any stopgap bill include an extension of the enhanced Affordable Care Act (ACA) premium subsidies set to expire at the end of the year, while Republicans do not want to include any health care reforms.

• See last week’s summary for a refresher.

New stakes: Last week, the White House Office of Management and Budget (OMB) instructed federal agencies to prepare reduction-in-force (RIF) plans for mass firings during a possible shutdown, targeting employees who work for programs that are not legally required to continue.

• The details: In a memo, OMB told agencies to identify programs, projects, and activities where discretionary funding will lapse Oct. 1 and no alternative funding source is available. For those areas, OMB directed agencies to begin drafting RIF plans that would go beyond standard furloughs and permanently eliminate jobs.
• Why it’s important: The move is a significant break from how shutdowns have been handled in the past, when furloughs were temporary and employees were brought back once Congress voted to reopen the government and funding was restored.

The moves leading up to the shutdown:

• The top congressional leaders of both parties met with President Trump Monday. It was the most significant development in the weeks-long stalemate, but no deal was struck.
• The Senate voted again on both the House-passed stopgap and the Democrats’ alternative on Tuesday night hours before the shutdown deadline. Both measures failed.

Next steps: Trump and Republicans are pressing the Senate to allow a House-passed 7-week stopgap to pass and punt larger negotiation for later. The Senate is expected to continue to hold votes almost daily on the bills. It is unclear when Congress will reopen the government.

Also expiring: The temporary rules that have been extended since COVID to allow telehealth visits in Medicare without first requiring an in-person visit also expired.

Other plans to extend the ACA subsidies: Republicans do not want to extend the ACA subsidies as part of the stopgap spending bill, but some are open to the possibility of extending them later, with some conditions attached.

• One modification they have discussed is requiring ACA enrollees to pay a minimum out-of-pocket premium and barring zero-premium plans.
• Another potential change is limiting the tax credits so that enrollees who earn above a certain income level are not eligible (a $200,000 cap has been floated).
• Other proposed restrictions include grandfathering in current beneficiaries but cutting off access for new enrollees.
• Any extension of the subsidies is likely to be only for one or a couple of years, not permanent.
• But: Democrats argue it is necessary to resolve the issue as part of government funding before open enrollment starts Nov. 1. While vulnerable Republicans up for reelection next year are interested in extending the subsidies, conservatives remain opposed to an extension they say is costly and was intended to be temporary relief during COVID.