Government Shutdown Implications for Health Programs and Personnel
Tara Straw and Julian Polaris, Manatt Health
As congressional negotiations continue to stall on fiscal year (FY) 2024 appropriations, federal agencies are deep into contingency planning for a potential government shutdown beginning October 1. Decisions are still being made about which federal activities and personnel are considered essential. As described further below, the plans currently available from the Department of Health and Human Services (HHS) indicate that core program operations will continue for Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP)—including payments to providers and managed care plans and ongoing implementation of the Inflation Reduction Act’s (IRA) Medicare prescription drug negotiation program—and also for Food and Drug Administration (FDA) oversight of drugs and devices. However, it appears that some rulemaking or policymaking activities may be delayed.
HHS estimates that for FY 2024, 58% of its staff would continue to work in the event of a shutdown, while the remaining 42% would be furloughed. In general, staff will not be furloughed if they are either “authorized by law” or necessary for the “safety of human life and protection of property” (see below).
Implications for Health Programs and Personnel
Centers for Medicare & Medicaid Services (CMS)
Nearly half of CMS staff would be retained because they either work on funded activities (such as the Medicare program) or are paid through non-discretionary funds (such as user fees). CMS activities/personnel likely to continue through a government shutdown include:
- Medicare payments to providers and Medicare Advantage Organizations, as well as related Medicare program activities—including implementation of the IRA drug negotiation program Medicaid and CHIP payments to states.
- CMS operations across programs to address COVID-19 (due to targeted appropriations under the Coronavirus Aid, Relief, and Economic Security Act).
- Core staff who support CMS oversight of states’ Medicaid unwinding efforts.
- Operations of the federal health insurance Marketplace (HealthCare.gov), such as eligibility determinations, which can be funded using carryover from its user fee collections.
- Other non-discretionary activities, including the Health Care Fraud and Abuse Control Program and Center for Medicare & Medicaid Innovation (CMMI) activities.
Although CMS hasn’t explicitly indicated which activities will be affected by a government shutdown, it is likely that longer-term rulemaking and policymaking functions would be stalled during a shutdown due to the furloughing of relevant staff within CMS, and also within other federal departments—such as the Office of Management and Budget—that collaborate on policy development. In addition, there may be delays in CMS’ review and approval of state applications for federal flexibilities, such as section 1115 Medicaid demonstrations or section 1332 innovation waivers for the Marketplace.
Food and Drug Administration (FDA)
The FDA will retain 81% of its staff—a much higher proportion than CMS—since many are funded through sources such as carryover user fees. As a result, it appears the impact of a shutdown on the FDA will be relatively limited, except for the delays in certain longer-term rulemaking activities, as noted above regarding CMS. FDA activities/personnel likely to continue through a government shutdown include:
- Activities funded through user fees, including approval of new medical products, the review of requests to conduct clinical research, the issuance of guidance, and other necessary activities to help patients access new therapies and generic and biosimilar treatment options.
- Activities related to imminent threats to human health or life. This includes detecting and responding to public health emergencies and other critical public health challenges, mitigating drug shortages, surveillance of adverse event reports, and criminal enforcement work and certain civil investigations.
- Activities that can be carried out with any remaining COVID-19 supplemental funding, including work on emergency use authorizations to respond to the COVID-19 pandemic, mitigation efforts related to potential drug and medical product shortages and other supply chain disruptions, and counterfeit and misbranded products related to COVID-19.
Centers for Disease Control and Prevention (CDC)
Given the CDC’s high reliance on annual appropriations, 59% of CDC staff would be furloughed during a government shutdown. The CDC has not outlined which specific public health activities would be suspended. CDC activities/personnel likely to continue through a government shutdown include:
- Activities to protect the health and well-being of U.S. citizens through response to outbreaks, maintaining laboratory functions, the President’s Emergency Plan for AIDS Relief, and the agency’s 24/7 emergency operations center.
- Immediate response to urgent disease outbreaks and critical investigation needs in areas such as food, healthcare, vectors (mosquitoes and ticks), and high-consequence pathogens.
- The Vaccines for Children program, and other programs supported through mandatory funding (which might include some COVID-19 activities).
- Collection of data being reported by states, hospitals, and others, and the reporting out of critical information needed for state and local health authorities and providers to track, prevent, and treat diseases.
Department of Justice (DOJ)
The DOJ represents the administration in court, including in the lawsuits challenging federal policies related to the No Surprises Act, IRA drug negotiation, mandatory commercial coverage of preventive services, and the FDA’s approval of medication abortion. Roughly 85% of DOJ staff would be exempt from the furlough. The DOJ works under the general principle that the impairment or perceived impairment of the law enforcement capacity of the U.S. government could constitute an imminent threat to the safety of human life and the protection of property.
With respect to civil litigation, however—potentially including the legal challenges outlined above—some DOJ activities may be curtailed or postponed. The DOJ would limit its civil litigation staffing to the minimum level needed and would file requests with the courts to suspend active proceedings until government funding is reinstated, except in those cases in which a delay would compromise to a significant degree the safety of human life or the protection of property. If a court denies any such request, the government would continue to comply with all court-ordered deadlines.
 The Consolidated Appropriations Act, 2023, contains an appropriation of $197 billion for Medicaid for the first quarter of federal fiscal year 2024.
 DOJ’s most recent contingency plan is for FY 2022. While not updated for a lapse in FY 2024 funding, the plans are likely to be a strong indication of what an October 1 shutdown would entail.