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Rebecca Farley

Director, Policy & Advocacy, National Council for Behavioral Health

Government Shutdown Ends; Affordable Care Act Intact

October 16, 2013 | Federal Budget | Comments
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Congress voted late Wednesday on a deal to end the federal government shutdown and avert a default on the U.S. debt. The deal, negotiated by Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY), leaves the Affordable Care Act intact and sets a 2014 budget allocation of $986 trillion. It also extends the debt ceiling to February of next year, giving Congress additional time to reach an agreement on the long-term fiscal issues facing the country.

The deal was a blow to hardline conservatives in the House, whose opposition to the Affordable Care Act sparked the shutdown when they refused to support a 2014 budget resolution that did not also defund President Obama’s signature health reform law. Senator Ted Cruz of Texas emerged as the champion of this faction during his 21-hour speech railing against “Obamacare” and urging his colleagues to stand firm in their effort to defund the law. Yet, the government shutdown could not stop the rollout of the state-based health insurance marketplaces, a key element of the law’s coverage expansions that went into effect on October 1, the same day the government shutdown began. During the 16 days of the shutdown, House Republicans tried and repeatedly failed to find consensus on a budget package that both met conservatives’ demands for Obamacare defunding and also had enough votes to pass the House.

The final deal emerged as the result of 11th-hour negotiations between Senate leaders Harry Reid and Mitch McConnell, with the October 17 default deadline looming. It included the following elements:

  • A suspension of the statutory debt ceiling through February 7, 2014 – giving President Obama and the Treasury the authority to continue borrowing money to meet U.S. financial obligations;
  • Temporary funding to keep the government open through January 15, 2014, including retroactive pay for federal government employees who were furloughed during the shutdown;
  • The appointment of a conference committee to reconcile the House and Senate’s competing versions of the 2014 budget, with instructions to produce an agreement by December 13, 2013; and
  • A Republican-backed modification to the Affordable Care Act that would tighten requirements for verifying the income of individuals receiving federal subsidies for the purchase of health insurance through the marketplaces.

The deal did not include several other provisions that had been discussed during the lead-up to the shutdown, such as a repeal of the medical device tax and a prohibition on subsidies for Members of Congress and their staff to purchase insurance in the marketplaces. It also did not include a proposal that would have granted federal agencies flexibility in how they apply the automatic cuts mandated by the sequester. Reid noted that the sequester cuts would be harder to repeal if agencies could use this additional flexibility to mitigate their impact; with the next round of cuts scheduled to take effect January 15, repealing sequestration remains a Democratic priority.

Despite representing a defeat of House Republicans who had called for defunding or repealing the Affordable Care Act, Wednesday’s deal was notable for its major reductions in federal spending. At a top-line level of $986 billion, the agreement was more than 200 billion less than President Obama’s original 2014 budget proposal and approximately 17 billion less than the levels approved by the Senate budget committee earlier this year.

With the shutdown over and the debt ceiling extended through the new year, Congress has bought additional time to negotiate a more permanent solution to both the budget and the national debt. Nonetheless, legislators’ history of brinksmanship over the last two years left many observers questioning whether the extra time could really facilitate a bargain.

(Photo credit: AP file photo)