Health Reform: The Shutdown’s Impact

October 24, 2013

On Oct. 16, 2013, Congress reached an agreement to end the government shutdown. The agreement funds the federal government through Jan. 15, 2014, increases the debt limit through Feb. 7, 2014, and provides back pay to federal employees who were furloughed.

The agreement also makes one minor change to the Affordable Care Act (ACA), requiring individual eligibility for federal subsidies under the health care reform law to be verified.

The U.S. Constitution requires Congress to pass a bill establishing a federal budget, often called a spending bill. For a spending bill to pass, the Senate and the House of Representatives must all agree upon the bill, which must then be approved by the President. When Congress is unable to agree upon a federal budget, or when the President vetoes it, before the budget cycle ends, a government shutdown occurs.

Due to Congress’ inability to reach an agreement on a spending bill, a government shutdown began on Oct. 1, 2013, following the end of the federal government’s fiscal year. Although the Republican-controlled House of Representatives passed several spending bills that maintained spending levels, the bills did not provide funding to implement the ACA. The Democratic-controlled Senate refused to take up any bill that did not fully fund the ACA.

The agreement to end the government shutdown was passed by the Senate in an 81–18 vote and by the House of Representatives in a 285–144 vote. The President then signed the bill into law.

The agreement to end the shutdown includes a requirement that Exchanges verify individual eligibility for subsidies.

Impact on the Affordable Care Act
The ACA created health insurance subsidies, in the form of premium tax credits and cost-sharing reductions, to help eligible individuals and families purchase health insurance through an Exchange. Subsidies will be available beginning in 2014, at the same time the Exchanges are scheduled to become operational.

• Premium tax credits are available for people with somewhat higher incomes (up to 400% of FPL), and reduce out-of-pocket premium costs for the taxpayer.

• Reduced cost-sharing is available for individuals with lower incomes (up to 250% of FPL), and reduce out-of-pocket costs at the point of service (for example, lower deductibles and copayments).

The agreement to end the government shutdown includes a requirement that Exchanges verify individual eligibility for these subsidies. Under the agreement, the secretary of Health and Human Services must:

• Ensure that Exchanges verify individual eligibility for tax credits or cost-sharing reductions; and

• Certify to Congress that the Exchanges are verifying eligibility.

The Secretary is required to report to Congress by Jan. 1, 2014, regarding the procedures that Exchanges are using to verify eligibility.

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