Government shuts down over debate on enhanced ACA subsidies

The federal government shut down at 12:01 AM Wednesday after lawmakers failed to reach a deal to pass a short-term funding bill, which would have financed government operations for fiscal year 2026. It is the first government shutdown since January 2019.

According to the Washington Post, the disagreement is over enhanced ACA subsidies, which were originally implemented during the COVID-19 pandemic. The enhanced subsidies led to record-high enrollment in ACA plans, going from 11 million in 2020 to over 24 million in 2025.

Currently, Democratic lawmakers are pushing for the subsidies to be made permanent while Republican lawmakers excluded extra subsidies in the short-term government funding bill but said they may consider legislation at the end of the year to extend them. Democrats are also pushing for substantial Medicaid cuts under the One Big Beautiful Bill Act to be reversed.

"We have very large differences on healthcare and on their ability to undo whatever budget we agree to," said Senate Majority Leader Chuck Schumer (D-NY). "I think, for the first time, the president heard our objections and heard why we needed a bipartisan bill."

Potentially extending ACA subsidies is "a December policy issue, not a September funding issue," said House Speaker Mike Johnson (R-La.).

If the subsidies are not extended, the Congressional Budget Office estimates that nearly 4 million fewer people will be enrolled in ACA plans a decade from now. Separately, the Urban Institute estimated that allowing the enhanced subsidies to expire at the end of this year would decrease healthcare providers' revenue by $32.1 billion in 2026 and increase the demand for uncompensated care by $7.7 billion. However, extending the subsidies would cost taxpayers $350 billion over the next 10 years.

Several federal healthcare agencies are expected to be affected by the government shutdown.

CMS will pause or limit healthcare facility surveys and certifications, announcements about new policies and regulations, contract oversight, enrollee outreach, and more. HHS will also stop overseeing extramural research contracts and grants, managing public inquiries, and collecting and analyzing data.

FDA and CDC are also expected to stop certain aspects of their work, including reviews of new drug applications and responses to public health inquiries. At NIH, care for existing patients will continue, but no new patients will be admitted to the agency's clinical center and basic research and grantmaking will be paused.

Roughly 750,000 federal employees are expected to be furloughed due to the government shutdown. HHS plans to furlough 41% of its almost 80,000 employees while CMS will furlough over half of its 6,200 employees. Currently, these plans only apply to a short-term shutdown, but if there is an extended pause in federal funding, HHS would need to make further cutbacks.

However, HHS said that Medicare, Medicaid, the Children's Health Insurance Program, and the federal health insurance exchanges will continue operating in the immediate future. The first three programs are mandatory and not affected by annual appropriations while CMS could cover exchange expenses with user fees from insurance companies.

Currently, industry observers say that President Donald Trump may use the government shutdown to increase his efforts to cut 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, EVP for economic and health policy at the Bipartisan Policy Center. "I think that's a real challenge to patients and providers."

(Cunningham, Washington Post, 9/28; Early, Modern Healthcare, 9/29; McAuliff, Modern Healthcare, 9/30; Muoio, Fierce Healthcare, 9/26; Bogage/Beggin, Washington Post, 10/1; Cirruzzo, STAT+ [subscription required], 10/1; Nichols, Axios, 9/30)

FDA to study safety of abortion medication

In a letter sent to 22 Republican attorneys general, HHS Secretary Robert F. Kennedy Jr. and FDA Commissioner Marty Makary said that FDA is currently reviewing data on the safety and efficacy of the abortion medication mifepristone.

According to CNN, Republican attorneys general previously cited a report from the Ethics and Public Policy Center as evidence that mifepristone could be harmful and require more oversight. In their letter, Kennedy said that the report indicates "potential dangers that may attend offering mifepristone without sufficient medical support or supervision."

FDA is planning to conduct "its own review of the evidence, including real-world outcomes and evidence, relating to the safety and efficacy" of mifepristone, Kennedy and Makary said in the letter. "This Administration will ensure that women's health is properly protected by thoroughly investigating the circumstances under which mifepristone can be safely dispensed."

HHS to block Harvard from future research grants

Three months ago, HHS found that Harvard University failed to adequately address instances of antisemitism on its campus — claims that Harvard has disputed. According to the university, it has taken significant steps to address antisemitism and argued that the government's efforts to cut off the school's funding violate its First Amendment rights. In response to HHS' investigation, Education Secretary Linda McMahon issued a letter disqualifying Harvard from future federal funding.

However, Judge Allison D. Burroughs of the Federal District Court in Boston earlier this month sided with Harvard in its dispute with the federal government over funding cuts. Burroughs ultimately ruled against the Trump administration, but said the government could use its "constitutional, statutory or regulatory authority" to challenge Harvard again.

On Monday, HHS announced that it started the debarment process for Harvard University, which would block the school from receiving future research grants. Debarment is designed to blacklist entities who are determined to not be responsible enough to do business with the federal government, an administration official said.

According to the Wall Street Journal, the debarment process includes several steps, and it is not guaranteed that Harvard will ultimately be debarred. Currently, the Trump administration is recommending that HHS suspend all federal grant funds to Harvard. This suspension would last a year, during which the government will review whether the school should be permanently banned.

Currently, Harvard has 20 days from the official notice to request a hearing about the potential debarment.

(Bender, New York Times, 9/29; Andrews/Belkin, Wall Street Journal, 9/29)

Trump administration ends annual report on hunger

Last week, the Trump administration announced that it was ending an annual report on hunger in America since it had become "overly politicized" and was "rife with inaccuracies." In a press release, the U.S. Department of Agriculture (USDA) said that the 2024 Household Food Security Report, which is set to be released on Oct. 22, will be the last.

"The questions used to collect the data are entirely subjective and do not present an accurate picture of actual food security," USDA said. "The data is rife with inaccuracies slanted to create a narrative that is not representative of what is actually happening in the countryside as we are currently experiencing lower poverty rates, increasing wages, and job growth under the Trump Administration."

According to critics, ending this report will make it harder to measure hunger in the United States, as well as assess the impact of upcoming cuts to food stamps. The One Big Beautiful Bill Act, which was signed into law in July, includes a sharp reduction to food aid, which means that 3 million fewer people will qualify for food stamps.

"Trump is cancelling an annual government survey that measures hunger in America, rather than allow it to show hunger increasing under his tenure," said Bobby Kogan, senior director of federal budget policy at the Center for American Progress. "This follows the playbook of many non-democracies that cancel or manipulate reports that would otherwise show less-than-perfect news."

(Associated Press/MedPage Today, 9/22)