The impending September 30, 2025 government shutdown promises to have extensive implications for the healthcare system of America, directly targeting Medicare and Medicaid programs of more than 130 million Americans. Although essential benefit payments will not be affected, various support services and policy efforts stand to be severely impacted.
Medicare program operations during shutdown
Medicare benefits would mostly go uninterrupted during a government shutdown, as the program constitutes mandatory spending out of dedicated trust funds instead of yearly appropriations. The Centers for Medicare and Medicaid Services (CMS) anticipate Medicare Administrative Contractors to keep processing claims made by providers and making payments to medical providers.
Yet, major operational risks would ensue. CMS would have to furlough approximately 47% of employees, greatly restricting the agency’s ability for monitoring of large contractors such as Medicare Administrative Contractors. Decreased monitoring might impact provider complaint response time as well as contractor quality monitoring.
The closure would immediately affect CMS’s responsiveness to physician inquiries regarding Medicare policy or Merit-Based Incentive Payment System scores, and it may affect healthcare providers’ information on payment adjustments. Furthermore, Medicare card replacement service would be cut off, beneficiaries not being able to receive new cards until federal government activities resume.
Critical telehealth services are in danger of expiring immediately
Among the most impactful near-term effects is Medicare telehealth flexibilities that will expire on September 30, 2025, even in the event of a shutdown. The pandemic temporary provisions permit Medicare beneficiaries to receive telemedicine care at home, broaden provider eligibility, and permit audio-only visits.
Unless it is renewed by Congress, close to 33 million older traditional Medicare recipients would be denied home-based telehealth care and would have to go to approved rural facilities for distant visits. This shift would hit the about 6 million Medicare recipients who continued to utilize telehealth services up to 2024.
The sunset would also end the Acute Hospital Care at Home program and audio-only telehealth services, greatly limiting care options for disabled and elderly Americans who have come to rely on these flexible models of care delivery.
Medicaid program continuity and state impacts
Medicaid operations would continue with federal funds flowing in for the first quarter of fiscal 2026, preserving state programs with their critical services. Provider payment and Medicaid administration remain with the states, which have some protection from the effects of federal shutdowns.
But more extended disruptions may happen if the shutdown extends beyond early federal reserves. The Department of Health and Human Services would lay off approximately 41% of its workers, possibly disrupting tracking of state Medicaid programs and slowing down approval processes for state waiver requests or policy modifications.
State Medicaid programs also have distinct policy issues regarding prospective reductions from previous law. Democratic lawmakers want to roll back Medicaid reduction funding that would impact 8.6 million Americans through the next decade, including new work requirements and immigrant eligibility limits set to commence in 2027.
Broader health insurance market effects
The government shutdown standoff is really about Affordable Care Act premium tax credits that subsidize 22 million Americans’ marketplace health insurance premiums. The constricted subsidies, which lower average premiums by gigantic sums, are set to terminate at the end of 2025 if Congress does nothing as detailed in this article, Government shutdown just a day away: will Congress avoid the crisis?
If they were to expire, marketplace enrollees’ health insurance premiums would increase on average by 75%. A family of three that earns $90,000 annually, for example, would have their premium bill increase by $2,718. The Congressional Budget Office predicts that about 4 million fewer Americans would be covered under the marketplace in a decade if they’re not extended.
Health care providers would lose considerable amounts of money, estimated at $32 billion in revenue and $7.7 billion in uncompensated care expenses if subsidies lapse. Georgia would lose an estimated $3.7 billion in revenues in the health sector, the highest state impact in the country.
Federal health agency operations
The shutdown would have dramatic implications for the operations of federal health agencies. The Centers for Disease Control and Prevention would send almost two-thirds of its employees home on furlough, potentially slowing disease surveillance and ability to respond to outbreaks. The National Institutes of Health would keep only 25% of its employees, halting much of its regular research but continuing essential clinical work in its hospital.
The Food and Drug Administration would still have 86% of its employees working with user fee funds, still assessing new health products and having emergency response capacity like managing recalls. Day-to-day regulation activities and policymaking would be decelerated by decreased staffing.
Long-term healthcare system implications
In addition to explicit disruption of operations, the shutdown comes with wider tensions of healthcare policy that have the potential to redefine American health insurance coverage. The battle includes underlying tensions in terms of federal health expenditures and levels of government subsidies in healthcare markets.
Healthcare providers, particularly those serving as economic centers in their localities, threaten long-term effects from both their short-term disruption and policy uncertainty. The synergy of reduced federal regulation, delayed regulatory timelines, and potential coverage losses could yield sustained impacts on healthcare access and affordability to tens of millions of Americans.
Resolution of these financing disputes over health will in most likely shape not only short-term government activity but also future American health insurance policy, from rural telemedicine access to inner-city hospital fiscal wellness.
