The Federal Government Has Shut Down. Now What?

October 01, 2025

The federal government has officially shut down after Congress failed to reach a last-minute deal ahead of its September 30 funding deadline.

The shutdown is the first since December 2018, which was the longest in U.S. history at 35 days. The Office of Management and Budget released a notice Tuesday that federal agencies should begin their preparations for an orderly shutdown.

The shutdown has several important implications for hospitals and health care. Here’s what you need to know:

How we got here

Last month, House Republicans approved a stopgap bill that would have funded the government through November 21. The bill included hospital priorities, including extension of current Medicaid Disproportional Share Hospital (DSH) payments, the Medicare-Dependent Hospital (MDH) program, and the Low-Volume Hospital (LVH) adjustment, as well as extensions of Medicare telehealth and hospital-at-home flexibilities.

Senate Democrats rejected the proposal, calling on Congress to reverse Medicaid cuts included as part of H.R. 1 and extend enhanced premium tax credits for marketplace coverage that are set to expire at the end of the year.

The two sides will need to agree on a proposal but appear far apart on a compromise.

What it means for health care

Mandatory spending assigned for Medicare, and Medicaid will continue, but some related services—such as Medicare contractors—will not receive payments during a shutdown. This can result in payment delays.

Federal payments to states for their Medicaid benefits are fully funded through the end of December 2025. In addition, the Children's Health Insurance Program (CHIP) is fully funded through fiscal year (FY) 2029. Other key hospital payments, including Medicaid DSH, MDH, and LVH, require congressional authorization to continue during the shutdown, as do waivers for telehealth and hospital-at-home.

A shutdown would result in significant staff furloughs at the U.S. Department of Health and Human Services, including its agencies such as CMS and Health Resources and Services (HRSA), which would affect programs and operations.

What’s offline?

With a shutdown, federal agencies must determine the essential functions and personnel that must remain in place.

The Department of Health and Human Services (HHS), CMS, and (HRSA) have published contingency plans to guide their operations through a potential shutdown.

HAP’s role

HAP will continue to advocate with Pennsylvania’s congressional delegation and the administration to support hospitals and coordinate closely with the American Hospital Association and other state associations. See our recent bulletin (login required) for additional information and be on the lookout for additional updates as we monitor the latest developments.

For More Information, contact John Myers, vice president, federal advocacy.