The federal government shut down on October 1 after Congress failed to reach a budget agreement. While mandatory programs like Medicare and Medicaid continue to operate, the lapse in discretionary funding has disrupted key healthcare programs, creating operational and financial strain across the sector. 

Key impacts include: 

• Enhanced Affordable Care Act (ACA) subsidies: Without an extension, premiums on the individual marketplace could rise, potentially leaving 3.8 million people uninsured. 

• Telehealth flexibilities: Pandemic-era waivers for geographic and modality restrictions expired, with the Centers for Medicare & Medicaid Services (CMS) advising providers to hold claims until further guidance. 

• Hospital-at-Home: Waivers supporting Medicare reimbursement for home-based acute care have ended, forcing hospitals to readmit eligible patients. 

• Safety-net funding: The $8 billion reduction in Medicaid Disproportionate Share Hospital (DSH) payments—along with the expiration of rural add-on payments—is straining community and critical-access hospitals. 

• Agency furloughs: Thousands of employees across the U.S. Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS), and Food and Drug Administration (FDA) are on leave, delaying reviews, audits, and data releases. 

• Grants and workforce programs: The National Institutes of Health (NIH) and Health Resources and Services Administration (HRSA) have paused new funding, halting research projects and workforce training pipelines.