Status and Impacts of the Government Shutdown


October 3, 2025

As predicted, the Republicans’ “clean” continuing resolution (CR) that would fund the government at current levels until November 21st and the Democrats’ CR that includes an extension of the enhanced Affordable Care Act marketplace subsidies (“ACA subsidies”) and restores $1 trillion of Medicaid cuts both failed a third vote yesterday evening, leading to a federal government shutdown at 11:59 p.m. In response to the many instances of the Administration rescinding previously appropriated funding this year, the Democrats’ CR also includes a provision that will stipulate that no funding included in the CR can be rescinded except by an act of Congress. This is important to prevent the reversal of any agreed upon spending that the Senate eventually agrees on. Democrats have said they cannot agree to any CR without this provision.

ACA Subsidies

The Democrats also are standing firm on including an extension of the enhanced ACA subsidies. About 513,000 people in New Jersey are enrolled in the state-run insurance marketplace. CBS News reported, “The cost of premiums for people who buy their insurance through the ACA marketplaces could more than double, rising from an average of $888 in 2025 to $1,904 in 2026, according to a Sept. 30 analysis by KFF.”  

Republicans are insisting the ACA subsidies can be addressed separately from the CR, pointing out that they do not expire until December 31st. However, insurers are already preparing to send, or have sent, notices to households that they will see increases starting in January 2026, and individuals will have to make their healthcare purchase decisions in October and November. Absent congressional action, premiums are expected to spike 18% on average nationwide. Even with an extension of the enhanced credits, NJSpotlight reports that “premiums in New Jersey under the 2010 law would rise 12.8%, according to the state Department of Banking and Insurance.”

Nationwide, about four million people would likely drop their insurance coverage if the enhanced credits are allowed to expire, the Congressional Budget Office has estimated. Others estimate that allowing the ACA subsidies to expire will result in $32.1 billion in lost revenue for providers. Healthcare Finance News wrote, “The burden of the increase in uncompensated care… would fall on all provider types: about $2.2 billion on hospitals, $1 billion on physician offices, $1.5 billion on prescription drugs and $3.1 billion on other services. A little more than half of the increase in uncompensated care would be financed by providers, analysts said.”

While there is a bill (H.R. 5145) that would extend the tax credits for a year, which seems to have enough bipartisan support to easily pass the House, its chances in the Senate and for the President’s signature are less likely.

Telehealth Update – Medicare Mental Health Services Can Be Provided if the In-person Requirement Has Been Met

Separate from the budget lapse, telehealth provisions for Medicare also expired at midnight, meaning providers will not be able to bill for Medicare telehealth services as of today unless those services are in compliance with pre-COVID restrictions.  

Pre-COVID telehealth provisions do not allow individuals to receive telehealth services except at eligible sites (licensed healthcare facilities) unless in-person requirements have been met, meaning each client must have received a Medicare covered/Medicare eligible service in person from the telehealth provider within six months prior to the first telehealth mental health service, and then at least once every 12 months thereafter. This means only those Medicare clients a provider has seen in person since April 1st would be eligible for telehealth services today.

What Is and Is Not Impacted

The Department of Health and Human Services (HHS) announced on Monday that major healthcare systems will not be affected much by a shutdown, at least in the short term, noting that Medicare, Medicaid and the Children’s Health Insurance Program, three mandatory programs, all will continue operating. The federal health insurance exchanges will also be kept running, with the Centers for Medicare and Medicaid Services (CMS) covering those operating expenses with insurance company user fees.

Items under HHS’ purview that are affected include, but are not limited to the following:

•  Medicaid disproportionate share hospital payments would see an automatic $8 billion cut.

•  Community health center funding would lapse.

•  Pay enhancements for Medicare-dependent hospitals and low-volume hospitals would suspend.

•  Graduate medical education funding would cease.

There are many resources that share information on the broader impacts of the shutdown. Here are a few we think you will find helpful:

Congressman Norcross has developed a helpful Q&A webpage regarding the impacts

Substance Abuse and Mental Health Services Administration (SAMHSA)

Centers for Medicare and Medicaid Services

Administration for Children and Families

Health Resources and Services Administration

All HHS Divisions

 Going Forward

The Senate is in session today, but will not be in session on Thursday in observance of Yom Kippur. Senators expect to be back in session Friday and perhaps through the weekend. Any CR that passes the Senate that is different from what the House previously passed will have to receive a vote in the House; however, the House is not scheduled to return until October 7th. NJAMHAA will continue to keep you updated on all aspects of the shutdown and any CR that is agreed upon.

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