A stalemate in Congress over a spending plan for the 2013-2014 fiscal year and a delay in the Affordable Care Act (ACA), has forced a federal shutdown at midnight last night, closing many federal agencies, including a number of departments under the U.S. Department of Health and Human Services (HHS). The new fiscal year began today, October 1. The House Republicans are proposing to continue spending at current levels with a one year delay in the implementation of the ACA. While the Senate Democrats have also agreed to continue government operations at current spending levels, they have resoundingly rejected the House Republican proposals to defund or delay the ACA multiple times in the last week.

Ironically, this shutdown comes on the very day that health benefit exchanges across the country, including Covered California, open for enrollment. Under the ACA, these exchanges are expected to provide health insurance to over 30 million previously uninsured Americans, including 1.3 million in California. The federal government shutdown will not impact open enrollment and exchanges will continue working on implementation as the January 1, 2014, launch date approaches.

Deliberations to fund the government continue and some Congressional leaders anticipate that at least a short-term budget will be enacted in the next few days. In the meantime, however, many government programs have been forced to stop operating until Congress reaches an agreement.

In the short-term, the Medicare program will experience little disruption, and claims will continue to be paid. The transition to the new Medicare claims payment contractor, Noridian, will continue. Other activities conducted by the Centers for Medicare and Medicaid Services (CMS), including health care fraud and abuse control, the Center for Medicare and Medicaid Innovation, and activities related to implementation of the Affordable Care Act, will continue. States will continue to receive funding for Medicaid and the Children’s Health Insurance Program.

Among the activities that will be impacted by the shutdown:

In all, about 52 percent of HHS employees will be furloughed, with grant-making and employee-intensive agencies (e.g., the Agency for Healthcare Research and Quality) experiencing the most severe impacts. Most staff will be retained in agencies that have a substantial direct service component, like the Indian Health Service.

The HHS released a memorandum last week that outlines the department’s contingency staffing and operating plans for the shutdown.

CMA is urging Congress to reach an agreement on the federal budget and get on with the important business of reforming the Medicare payment system and other priority issues before Congress.