Background

The federal government shut down at 12:01 a.m. on Oct. 1 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.

The main disagreement concerns enhanced subsidies under the Affordable Care Act (ACA), which were originally implemented during the COVID-19 pandemic and are slated to expire at the end of this year.

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 the reversal of substantial Medicaid cuts established under the One Big Beautiful Bill Act (OBBBA).

According to a recent analysis by KFF, if the subsidies are not extended, average premiums would increase by 114%, from $888 to $1,904 per year for ACA enrollees.

In addition, the Congressional Budget Office estimated that nearly 4 million fewer people will be enrolled in ACA plans a decade from now if the subsidies aren't extended, and the Urban Institute estimated that healthcare providers' revenue would decrease by $32.1 billion in 2026 while the demand for uncompensated care would increase by $7.7 billion.

The shutdown's impact on healthcare providers

While programs like Medicare and Medicaid will continue operating during the government shutdown, funding lapses — such as Medicare's inability to reimburse telehealth and hospital-at-home services — and the expiration of legal authorities for some healthcare policies, are having an immediate impact on some healthcare providers, community health centers (CHCs), and hospitals working with tight margins.

In addition, the shutdown comes as healthcare providers are already preparing for the implementation of more than $1 trillion in Medicaid and health insurance exchange cuts as part of the OBBBA.

Given the uncertainty over how long the shutdown will last and how long it will take Congress to reauthorize Medicare coverage of telehealth and hospital-at-home services, providers have to determine whether to continue treating patients and risk losing reimbursement and must warn patients that they might be responsible for costs in the interim.

"Most providers and hospital systems are taking calculated risks to continue care during this time, but long-term continuity depends on action by our telehealth champions in Washington to restore these flexibilities and ensure retroactive reimbursement," said Kyle Zebley, SVP of public policy at the American Telemedicine Association.

Telehealth providers specifically have been divided on how to handle the loss of reimbursement during the shutdown. Some providers are shutting down their services, some plan to continue submitting their care claims hoping they'll get reimbursed later, and others have yet to decide what to do, according to Alexis Apple, head of federal affairs for the American Telemedicine Association.

"They're divided into thirds," Apple said. "But more [providers] are preparing an advanced beneficiary notice to let patients know that they'll be financially responsible if Medicare doesn't end up covering the visits during the shutdown."

CMS released guidance for telehealth providers when the shutdown started, saying it would continue collecting claims for services for Medicare members for 10 days, though it's unclear whether reimbursement will continue after the 10-day period is over.

In the past, Congress has made providers whole once funding or program authorizations run out, but financially strapped hospitals could struggle in the near term as they're forced to cancel telehealth and hospital-at-home appointments while also contending with lower Medicare payments without add-ons.

"Even though payments are typically restored, a lapse is unpredictable and uncertain for hospital administrators, and we advocate for long-term extensions," said Alexa McKinley, director of government affairs and policy at the National Rural Health Association.

The smaller a provider is or the narrower their margins are, the heavier the burden will be on both them and their patients.

"We see firsthand the anxiety and uncertainty this brings to patients who depend on government-supported programs for their care and well-being, and we feel that uncertainty ourselves as we experience the conflict of helping patients achieve healthier lives in the face of limited resources," the American Academy of Family Physicians said in a press release.

The shutdown's impact on the organ transplant network

In addition to its effects on healthcare providers, the government shutdown has caused the United Network for Organ Sharing (UNOS) to halt many of its operations.

UNOS told Axios that, while patients are still able to receive and donate organs, the organ donation and transplant network has had to stop monitoring some of the transplant and donation outcomes and the impacts of its new policies.

A document dated Oct. 2 from HHS reviewed by Axios stated that UNOS could only continue support for critical patient safety work while the government is shut down, as well as work on lawsuits and fee collection that doesn't require government input.

Work permitted includes matching and allocating organs, IT support, continued communication with patients on waitlists, and addressing life-threatening risks. "Other than these tasks, work under the contract cannot be performed during the lapse in appropriations," the document said.

In addition, more than 90 staff members at UNOS, roughly 25% of the organization, have been furloughed because of the shutdown.

"As a private, non-profit organization, UNOS is not in a position to continue funding the salaries of employees whose roles are primarily tied to the [Organ Procurement and Transplantation Network] when the government has indicated it will not cover those costs," UNOS said in a statement.

A White House official disputed UNOS' claim that it has to stop important organ donation network activities during the shutdown, saying that risk monitoring and essential functions of the network should continue without any interruption.

Activities related to out-of-sequence organ allocations and other concerns can continue with specific approval from HHS' Health Resources and Services Administration (HRSA).

"During the Democrat-led shutdown, HRSA is only working on activities related to patient safety and on-going operations of the organ matching system," HHS press secretary Emily Hilliard said in a statement. "Patients will not have any disruption in their ability to donate organs, be added to the waitlist, or access an organ transplant."