The key health care policies at stake in Congress’ government funding fight

STAT News – Tuesday, September 2, 2025
By John Wilkerson

WASHINGTON — Critical health care policies hang in the balance as Congress returns from recess Tuesday and begins a fight over government funding.

The deadline for funding the government is Sept. 30. Congress could pass temporary funding measures to buy time for negotiation, but a government shutdown is not out of the question. A true appropriations bill could likely be finished by the end of the year.

The expiring enhanced subsidies that have made Affordable Care Act marketplace plans cheaper will likely factor prominently into the government-funding debate, thanks to their cost and political importance, which will in turn affect multiple other health care policies.

Some of those policies, including hospital site-neutral payments, Medicare Advantage coding intensity adjustments, and drug middlemen reforms, could pay for renewing the subsidies. There are several expiring Medicare, Medicaid, and public health programs that typically hitch a ride with government spending bills. Then there are the wild card policies, such as those related to Medicare doctor payment and Medicare drug price negotiation, that could be included in the mix.

Separately, Congress is working on a must-pass defense bill, the National Defense Authorization Act, that could include legislation aimed at restricting U.S. biotech companies from doing business with companies in China. That bill, called the BIOSECURE Act, did not make it into last year’s version of the national defense bill, but a key aspect of the bill that thwarted its passage has been removed. The new version of the BIOSECURE Act no longer mentions specific companies by name. Still, it’s not clear whether it will gain traction.

Enrollment for 2026 ACA plans starts in November. If the tax credits are not renewed well before then, notices will go out alerting enrollees to premium increases that in some cases will be substantial.

Congress is not expected to pass appropriations bills by the end of the month. Lawmakers could instead buy time to negotiate with a stopgap funding measure, but even that could be fraught with political demands, and the government could shut down temporarily if the two parties make ultimatums that cannot quickly be resolved.

There are a couple of matters each chamber will need to deal with before getting to a funding bill. Republicans are threatening to change the Senate rules to speed confirmation of Trump’s nominees in response to Democrats’ tactic of slowing down confirmation votes. Then there are the Jeffrey Epstein files, which so thwarted legislative business in the House that Speaker Mike Johnson (R-La.) sent lawmakers home early for summer break to avoid further intra-party fights. It will be difficult for the House to take up any legislation until that issue is resolved.

Once lawmakers get to it, funding the government is not expected to be an easy task. The Senate Appropriations Committee approved a $400 million increase for the National Institutes of Health, compared to the 40% cut to the agency’s budget in the White House’s proposed budget. The House Appropriations subcommittee that handles Health and Human Services spending has not yet released its bill, but it is scheduled to mark up the bill Tuesday. The House might hew closer to the White House’s requested funding levels, and the two chambers would need to reconcile those differences.

Also, Democrats have said they’re wary of working with Republicans on appropriations bills. Democrats say they don’t trust the other party to keep promises after Republicans reneged on spending deals by rescinding funding for public broadcasting and by canceling NIH grants and slowing new awards. Passing government-spending legislation requires 60 votes in the Senate, and there are 53 Republican senators. If Democrats withhold support for government spending bills, the government could shut down.

But there are signs that the two parties might overcome their differences. And while the ability to shut down the government might be the best leverage Senate Democrats have in negotiations, passing appropriations legislation would help them prevent the administration from withholding grants and other appropriated funds.

The bipartisan Senate HHS appropriations bill for the first time details spending levels for specific programs. Those specifications normally would be part of an accompanying, nonbinding report. This tactic would make program spending levels legally binding.

In addition to bucking the White House’s proposed funding cuts to NIH, the Senate appropriations bill leaves out Kennedy’s MAHA agency, which would’ve likely been a dealbreaker for Democrats.

There also seems to have been a de-escalation on other fronts, though the Trump administration continues to provoke Congress on rescissions.

In July, Katie Britt (R-Ala.) and 13 of her Republican colleagues sent a letter to Office of Management and Budget Director Russell Vought, expressing deep concern about the slow disbursement rate of NIH funds. Days later, Vought halted NIH payments to researchers, but he reversed himself later that day after protests from lawmakers and patient advocacy groups.

Over the summer, Vought declined to promise not to use so-called pocket rescissions to impound appropriated funds. Then, OMB on Aug. 28 announced it is using a pocket rescission to avoid spending $5 billion on foreign aid. Republican Appropriations Committee Chair Susan Collins (Maine) shot back, pointing out that the Government Accountability Office said the tactic is unconstitutional.

However, it’s not clear whether that OMB action is enough to tank an appropriations bill, given that the rescission targets foreign aid.

Talk of returning to the same partisan budget process that Republicans used to pass their tax cut bill has died down. That doesn’t mean they won’t use the budget reconciliation process again, but it seems less likely to happen during government funding negotiations.

Meanwhile, there is increased talk among Republicans of partially renewing the enhanced ACA premium tax credits. According to the investment firm Jeffries, Republican and Democratic leaders are discussing an extension. The note says those discussions have been difficult, but others following the matter say it’s a positive sign that they’re talking at all.

There is not universal support for the enhanced tax credits among Republicans, and conservatives have attacked those subsidies as wasteful and fraud-inducing. But it’s in the interest of some members of both parties to at least partially extend the tax credits.

Some of the fastest marketplace enrollment growth has been in red states. Many voters are angry at Republicans over Medicaid cuts in the tax bill, and GOP lawmakers don’t want to get the blame for making marketplace coverage more expensive, too. The Medicaid cuts take effect after midterms, while the marketplace premiums would go up, in some cases by a lot, next year.

The size of a tax credit extension would impact other health care provisions. The more expensive it gets, the greater the need for other health care policies to offset it. A higher price tag also could leave less room for other policies that increase the deficit.

It would cost $335 billion over the next decade to make the enhanced subsidies permanent, according to the most recent estimate. Congress could lower that cost by shortening the timeframe.

Medicare and Medicaid extenders have the best chance of being enacted. Well over a dozen programs will expire this year if lawmakers don’t act. Those include a popular Medicare program that makes telehealth services widely available, and funding for community health centers and hospitals that care for large numbers of uninsured.

Those programs would likely be extended for the same length of time as the government-funding bill. Telehealth is the one exception. Many lawmakers would like to make the program permanent, or at least extend it beyond the next midterm election, but that costs more.

Doctors are lobbying for an increase to the Medicare pay rate. Republicans’ tax law gives them a 2.5% pay bump in 2026, and they’re trying to match that rate for 2027. It’s been a longtime goal of doctors to tie the Medicare pay rate for physician services to inflation, though that carries a heftier price tag.

Drugmakers would like to delay Medicare negotiations for small-molecule drugs to match the eligibility timeframe for biologics. Trump signed an executive order directing HHS to work with Congress on such a policy. However, Republicans may be wary of giving the drug industry another break after they exempted more drugs from Medicare price negotiation in their tax bill. That orphan drug measure ended up being more lucrative for industry, and more costly for taxpayers, than many expected.

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