Life Sciences Blog

Could the US government shutdown undermine healthcare reform in the US?




On 1 October, health insurance marketplaces were officially launched in the US, offering affordable health care coverage to millions of uninsured Americans for the first time – a key milestone for the United States. And while the higher than expected visits to the online marketplaces led to some technical issues, attention was directed away from enrollment towards the partial government shutdown that put nearly 800,000 employees and countless federal services on hold, indefinitely.

First partial government shutdown in 17 years
The Republican-led House of Representatives passed a budget bill on 29 September with a controversial clause that would delay the Affordable Care Act (ACA) individual mandate to purchase health insurance by one year. The Senate consequently refused to accept the bill and amended it to remove the provision that could delay implementation of US president Barack Obama's flagship healthcare reform, and sent it back to the House on 30 September. By then it was too late; the government began preparations for contingency plans overnight, to be in effect from 1 October 2013 until a new budget is put in place for the upcoming fiscal year.

As promised by the US administration, the roll-out of ACA was not affected by the partial government shutdown. However, other services across various departments are significantly impacted, as only essential functions related to national security and public safety are maintained. Currently, all Smithsonian museums, institutes, and zoos and national parks across America are closed.

Impact on HHS, NIH and FDA
The Department of Health and Human Services (HHS) is one of the departments that will be significantly affected by the partial shutdown. The HHS has already issued a contingency plan that will see nearly 52% of its staff, or 40,512 employees, being put on "furlough", or temporary unpaid leave, with different services seeing varying degrees of impact.

The department notes cessation of services across 12 of its programmes, including the National Institute of Health that will see most of its staff furloughed (73%, or 13,698 employees) and will be unable initiate new research protocols, make decisions on research grants and awards, or admit any new patients. This means that nearly 200 patients, 30 of which are children will be turned away from the NIH Clinics Centre each week, according to the NIH director.

In addition, the Centers for Disease Control and Prevention will be unable to support an annual influenza programme, infectious disease surveillance, and outbreak detection, as 68% of its staff take unpaid leave. The US FDA will be unable to regulate food and cosmetics and will have to discontinue safety inspections, compliance and monitoring activities, and all research. However, other services under the Prescription Drug User Fee Act will continue, despite nearly 45% of the FDA's staff, or 6,620 employees, facing furlough.

Implications of the shutdown
While the partial government shutdown is unlikely to affect healthcare reform in the US in the short-term, if a standstill continues for a prolonged period, the impact will be felt across all departments and will have negative implications to the US economy.

The last time the US government experienced a partial shutdown was in 1995, when the budget dispute between the Republican-led House and President Bill Clinton resulted in 22 days of suspended government activity before it was resolved with some concessions made in favour of the House.

It remains to be seen how long it will take Congress to agree on a bill to end the current standstill, as the government faces yet another challenge that will require bipartisan agreement on raising the country's USD16.7-trillion debt ceiling by 17 October. The political system in the US is very heavily divided, and healthcare reform is likely to continue to be a contested issue at the centre of the heated debates. If the shutdown continues, the chances of concessions being made to ACA might increase, alternatively, this might be a political game that may cost Republicans votes in the next elections.

About The Author

Margaret Labban is the Life Sciences Analyst for North America at IHS Markit. She has a PhD in Neuroscience from McGill University, and brings a scientific perspective to the pharma practice. Her areas of specialty include clinical research, pricing and reimbursement, corporate strategy, market access, and healthcare policy.