What Does the Partial Government Shutdown Mean for Medicaid and CHIP?

A year ago, the entire federal government was shut down for three days over a dispute about DACA.  My colleague Kelly Whitener explained the implications of that full shutdown for Medicaid and CHIP.  We are now in the 14th day of a partial government shutdown over a dispute about funding for a border wall.  Unlike the full shutdown that Kelly blogged about, this partial shutdown does not directly impact the Medicaid or CHIP programs, because funding for Medicaid and CHIP, and the agency that administers them (CMS), is available through at least September 30, 2019.

The difference between this partial shutdown and last year’s full shutdown is that not all federal departments are affected.  Congress has already approved, and the President has already signed into law, appropriations bills for FY 2019 for the Departments of Health and Human Services (HHS), Defense, Education, Labor, Energy, and Veterans Affairs.  The agencies that currently have no funding for the rest of FY 2019 are the Departments of Agriculture, Commerce, Homeland Security, Interior, Justice, State, and Transportation.

Even though HHS has appropriations through September 30, funding for some of its agencies, notably the Indian Health Service (IHS) and the Food and Drug Administration (FDA), comes from appropriations bills for departments that are currently unfunded (Interior and Agriculture).  HHS’s plan for dealing with these shortfalls is to furlough 24% of its employees. In the case of the IHS, the agency can continue to staff and operate its hospitals and clinics but it is no longer able to provide the majority of funds for Tribes and Urban Indian Programs to operate their own facilities.

One example of the complexity of this partial shutdown has to do with the Department of Justice, which represents HHS in litigation, including the challenges to the Arkansas and Kentucky work requirements waivers. As part of this representation, DOJ lawyers have been reviewing the approval letters CMS has been issuing to additional states like Maine and Michigan. DOJ’s Contingency Plan for a lapse in appropriations in FY2019 states that civil litigation “will be curtailed or postponed to the extent that this can be done without compromising to a significant degree the safety of human life or the protection of property.”  DOJ litigators will request that active cases that meet this test be postponed until the agency is funded. Judges will then decide whether to grant or deny the request; if the request for postponement is denied, DOJ will continue to litigate. It will be important to watch how this plays out for the current waiver cases and the processing of new approvals, which CMS (an agency that is funded for FY 2019) is determined to continue.

So the good news is that Medicaid and CHIP, and the agency that administers them at the federal level, can continue to operate without interruption through September 30. But keep Kelly’s blog handy. October 1 will mark the start of FY 2020. When the dust settles on this partial shutdown, if the President believes that shutdowns can be a useful leverage point going into the 2020 elections, a full shutdown may look more attractive to him and his supporters in the Congress.

[Editor’s Note: To learn how the partial government shutdown is impacting the ACA Marketplaces, read blog by Sabrina Corlette with the Georgetown University Center on Health Insurance Reforms.]

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.