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What Happens with Medicare If the Federal Government Shuts Down?

A government shutdown could be on the horizon for the United States. Congress has been struggling to pass the 12 annual appropriation bills that define how much federal funding different government committees receive. It was able to delay a shutdown on October 1 by passing a continuing resolution, but now, the new deadline has been set for November 17.

If Congress cannot agree by then, many non-essential government operations would be shut down. Since Medicare is managed by the federally funded Centers for Medicare & Medicaid Services (CMS), you might be concerned about what could happen to your Medicare coverage. Let’s take a closer look at how a potential government shutdown might affect Medicare and other federally funded health programs.

Medicare Benefits Would Not Be Affected

The good news is that because Medicare is a mandatory spending program, it has permanent funding. This means that even if Congress does not pass new budget bills before November 17, your benefits will not be affected. You could continue to go to the doctor, receive medical treatments, and order medical supplies like normal. Medicare would continue to pay doctors and medical centers, so you would not be denied any care.

But that does not mean Medicare would operate like normal. Other parts of the Medicare service could be affected by a shutdown.

Some Medicare Administrative Tasks Might Be Shut Down

During a shutdown, it’s estimated that 51% of CMS staff would be furloughed. As you can imagine, that greatly reduces the number of administrative services Medicare can offer. For example, you might have a much longer wait to speak to a CMS representative if you have questions. And if you needed to replace your Medicare card, you might even need to wait until the government reopens.

The problem is especially worrisome for people getting ready to enroll in Medicare. CMS likely would not have the manpower to accept new enrollees, meaning you’d have to wait until the new budget is passed. This could have disastrous consequences. During the 1995-1996 government shutdown, over 10,000 Medicare applicants were denied each day. Considering the percentage of adults over 65 in the United States has roughly doubled since then, this could cause a real healthcare crisis.

Medicare Drug Pricing Negotiations Would Go On

Another hot Medicare issue that’s been in the news is prescription drug price negotiations. The Biden administration has been attempting to lower costs for 10 drugs taken by millions of Medicare enrollees. Currently, these drugs cost Medicare billions each year, and reducing that price tag would ease the burden on consumers.

The Inflation Reduction Act (signed in 2022) has already earmarked $3 billion for this cause, so the negotiations should have enough money to stay afloat even during a shutdown. Even if they were to pause temporarily, the price changes were not slated to take effect until 2026, so it’s not likely to cause too much of a delay.

Other Department of Health and Human Services (HHS) Programs

Medicare is one of several federally funded health programs under the umbrella of the HHS. The HHS manages other discretionary programs that rely on funding allocation from Congress. On the whole, about 42% of HHS staff would be furloughed during a shutdown. This means many programs might stop providing services. However, the government says that activities “for safety of human life or the protection of property” can continue without spending authority from Congress.

Here’s a quick look at how these programs might fare during a shutdown.

Medicaid Benefits Would Have a Three-Month Runway

Medicaid is also a mandatory spending program, so coverage would not be affected. That said, it does not have unlimited funds. Right now, it has enough funding for the next three months. If the shutdown were to last longer than that, then Medicaid recipients might be in trouble. However, that seems unlikely considering the longest-ever shutdown was 36 days.

The National Institutes of Health (NIH) Would See Major Shutdowns

The official lapse plan for the NIH states that 22.4% of staff would be retained. Much of that staff would be working in facilities like the hospital on the campus of the National Institutes of Health to provide care to existing patients as well as conduct research. NIH animals would also continue to receive appropriate care. However, NIH would not be able to admit new patients or start new studies.

The Centers for Disease Control and Prevention (CDC) Would See Major Shutdowns

The CDC would continue to investigate disease outbreaks. However, it would have to do so with 41% of its usual staff. Other programs managed by the CDC that could continue operating include the President’s Emergency Plan for AIDS Relief, the Global AIDS Program, the World Trade Center Health Program, the Vaccines for Children program, and the Energy Employees Occupational Illness Compensation Program Act.

Finally, the agency’s 24/7 emergency operations center would continue to be staffed to help in the case of a public emergency.

Food and Drug Administration (FDA) Could Still Approve Drugs

Because many of the activities of the FDA are funded by drugmakers, much of the organization’s operations would be unaffected during a shutdown. In fact, the FDA would be able to retain 81% of its staff. This means the FDA would continue to regulate and approve drugs, medical devices, and other biological products. That said, there is uncertainty whether or not new drugs could enter the approval process.

Other Programs Could Operate as Usual

Several programs have enough funding to make due during a shutdown. For example, the Administration for Strategic Preparedness and Response (ASPR) would continue to prepare for any hazards, including COVID-19, pandemic flu, and hurricane responses. Also, the Indian Health Service, which provides healthcare to Native Americans and Alaska Natives, is another mandatory program with advanced, multi-year funding, so services would not be affected.

How to Prepare for a Government Shutdown

As a Medicare beneficiary, there’s not much you can do to prepare for a government shutdown. Luckily, you would not see much change in your healthcare services. But if you rely on other federally funded healthcare services, you may want to peruse the lapse plan for each organization to see what services might be cut. Certain polls rank the chance of a government shutdown as high as 87%, making this a good time to come up with a contingency plan of your own should certain services be made unavailable.

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