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5 things to know about a shutdown for health care

Feb 28, 2024
Illustration of the Capitol dome opening up to reveal an emergency button with a hand hovering above about to press it.

Illustration: Aïda Amer/Axios

Even a partial government shutdown could disrupt federal health programs, potentially slowing disease tracking during an active respiratory virus season and forcing furloughs at agencies including NIH and CMS.

Why it matters: Absent an 11th-hour funding deal, the effects would begin March 1, when a stopgap covering agencies including the FDA expires. Here are five things to know:

1. Watch for a ripple effect across federal health programs. Just four of the appropriations bills have the funding deadline of March 1, under House Republicans' "laddered CR."

  • The Agriculture-FDA bill is part of that first group, so FDA will proceed to a contingency plan in the event of a stalemate.
  • Time will run out on the Labor-HHS bill a week later, on March 8. And that will affect a much bigger tranche of agencies.
  • Erik Fatemi, a principal with Cornerstone Government Affairs and former Senate appropriations staffer, said a shutdown halfway through a fiscal year is potentially more disruptive.
  • "At the beginning of the year, agencies are just gearing up, they're not awarding a ton of money in those first few weeks," Fatemi said, adding that now "they're in the thick of it. There are a lot more fiscal activities that are in progress."

2. Contingency plans call for significant furloughs. OMB makes the call on how to implement shutdowns, and an agency official told Axios that initial communications went out on Friday.

  • Any updates to the current contingency plans will be posted on OMB's website.
  • The HHS plan, posted in September, called for 45% of department staff to be sent home by the second day of a funding lapse, while the remainder would be retained to handle essential functions.
  • 49% of CMS staff and 33% of the CDC's would be retained. CMS expects to keep enough staff to make payments to states for the Children's Health Insurance Program and to continue health insurance exchange activities.
  • HHS also expects to tap carryover funds, third party funding or user fees to maintain "minimal readiness" for hazards like COVID-19, flu, and hurricane responses. NIH, likewise, would continue COVID research and clinical activities.

3. The FDA can rely on user fees to float its boat for awhile. During the 35-day shutdown that began at the end of 2018, the FDA had to tap industry user fees to maintain product reviews and other essential functions. It can't accept new user fees while the government is shut down.

  • The agency in the past has suspended some food safety inspections. But the latest contingency plan released in September said that excepted FDA staff can continue monitoring food-borne illnesses and some inspection surveillance activities.
  • Even so, the FDA still has "hundreds of responsibilities," Steven Grossman, executive director of the Alliance for a Stronger FDA, wrote in an email, including "overseeing products and services that are 21% of all consumer spending."
  • "On a good day for FDA, it all works and nobody notices. That's threatened in a shutdown — only about 75% of the workforce will be available unless called back for a public health emergency," he said.

4. The CDC might need a special carve-out. CDC would probably need to designate certain people essential for disease surveillance and other core public health activities, Joe Antos, health scholar at the American Enterprise Institute, previously told Axios.

  • That's important to note since the HHS contingency plan during a separate 2018 shutdown included suspension of CDC's flu tracking surveillance system at the height of flu season.
  • The latest plan, states that immediate response to urgent disease outbreaks and investigation needs in areas like food, health care and high-consequence pathogens would continue.

5. As always, Medicare and Medicaid will continue to be funded. Entitlements like Medicare and Social Security aren't subject to the whims of the appropriations process because they're deemed mandatory spending.

  • The word is CMS is trying to prioritize work on states' Medicaid disenrollments and the eligibility redetermination process. But deeming some technical staff essential could adversely impact other critical agency work, said Edwin Park at Georgetown University's Center for Children and Families.

What we're watching: Sen. Susan Collins told Axios on Tuesday afternoon that she expected bill text for the first three or four appropriations bills that have the March 1 deadline to come out in the next 24 to 48 hours.

  • The question remains whether Speaker Mike Johnson opts to reach a deal with Democrats and avoid a shutdown or to follow the calls from his most conservative members and let funding lapse.
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