Paul Ryan says government shutdown wouldn't sideline Obamacare

Some congressional Republicans are threatening to deny funding for government operations unless a provision is included to defund President Barack Obama’s health care law. Because defunding Obama’s signature legislative accomplishment is a nonstarter for Democrats, lawmakers are now openly pondering the possibility of a government shutdown.

Other Republicans -- including Paul Ryan, the party’s former vice presidential nominee -- are warning that a government shutdown is a bad idea and won’t work anyway. That was a point he made on the Aug. 4, 2013, edition of CBS’ Face the Nation.

"Obamacare is an entitlement like Medicare and Social Security is, and so the entitlement carries on even under a government shutdown scenario," said Ryan, who is also the House budget chairman.

First, some background.

Shutdowns occur when appropriations bills expire, and Congress and the president are at an impasse. A shutdown typically prevents federal agencies from carrying out any functions deemed non-essential.

A shutdown last occurred in the mid 1990s, when President Bill Clinton squared off against a new Republican majority in the House and Senate. That led to two shutdowns -- one for five days in November 1995 and the other for 21 days from December 1995 to January 1996.

Some government functions are not reliant on congressional appropriations, and these can usually continue unimpeded in the face of a shutdown. Several elements of the health care law fall into this category.

Here’s a summary of some of the key provisions of the health care law and how they might be affected by shutdown.

Insurance exchanges and premium subsidies

Ryan referred to Obamacare being like such "entitlements" as Social Security and Medicare, which are not affected by shutdowns. An entitlement is a government program that is funded by a formula, rather than by the kinds of specific congressional appropriations that run out in a shutdown. Any American who meets the criteria for receiving the benefit will keep receiving payments even in the absence of congressional appropriations.

The health care law creates online marketplaces where uninsured Americans can purchase health insurance, and it offers them means-tested subsidies to help pay the premiums for those plans.

The subsidies fit the definition of an entitlement most directly. Because the subsidies are provided in the form of tax credits, they are not subject to appropriations, and thus should be able to proceed during a shutdown.

As for the operations of the exchanges themselves, these too seem likely to be unaffected by a shutdown, although for a different reason. The independent Congressional Research Service has concluded that implementation of the insurance marketplace is being funded by long-term appropriations -- funding streams that won’t be cut off during a government shutdown.

There’s one caveat, however: Delays could still occur if federal agencies have no workers, or too few, to carry out needed tasks.

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This has been an issue in the past with Social Security Administration employees. The agency’s operational employees are paid through appropriated funds. Would a shutdown prevent employees from going to work, potentially halting operations?

A 1981 attorney general's opinion protects the right of at least some Social Security workers to carry out necessary functions -- and that’s essentially what happened during the 1995 shutdowns.

According to Social Security's official history on its website, 4,780 employees remained at work at the start of the four-day shutdown, while the other 61,415 were furloughed. But this cut "significantly impacted the Agency’s service to the public," the account said, and on the second day, additional employees were recalled to work.

The second shutdown -- which lasted three weeks, the longest in history -- could have brought even more severe consequences. But the agency deployed 55,000 employees and operations remained close to normal.

Noting the past experience of Social Security, CRS wrote, "it may be reasonable to infer that any similar benefit programs" under the health care law would have enough administrative flexibility to keep operations going during a shutdown.

In other words, there’s no guarantee, but it’s likely that operations will continue.

Tax provisions

In general, tax collection is not affected by a shutdown. Anyone who incurs taxes is still liable for paying them on a quarterly or annual basis, even if the IRS is in shutdown mode. In addition, exceptions exist for processing tax payments received during a shutdown.

Some Obamacare taxes, such as those on branded pharmaceuticals, need to be calculated and assessed in writing by IRS before the manufacturer pays them, so these could be affected by a shutdown, according to the Congressional Research Service. But even if there’s a delay, the taxes will ultimately be paid, shutdown or not. This is true for the mandate on individuals to purchase health insurance; people who run afoul of this pay their penalty through their tax return.

Regulations

Many key aspects of the health care law are regulatory in nature -- for instance, rules about what insurers have to cover, how much insurers need to spend on health-related expenses and protections for patients with pre-existing conditions or those with young adult children. While these are all part of the health care law, a government shutdown wouldn’t really affect them. At most, enforcement efforts might lag during a shutdown, but the rules will remain on the books and will have to be respected.

"At most, government enforcement activity might be put on hold, but after the shutdown people could be investigated and held liable for violations they committed during the shutdown period," said Ronald Levin, a law professor at Washington University in St. Louis.

We will conclude by emphasizing the rarity of government shutdowns, and the absence of any that lasted any significant period of time.

"It depends how long any shutdown goes on," said Gail Wilensky, the former head of Medicare and Medicaid under President George H.W. Bush. "It's easy to be creative for a short period but harder after a while."

Our ruling

Ryan said that "Obamacare … carries on even under a government shutdown." For various reasons, most key parts of the law -- the insurance marketplace, the premium subsidies, and the taxes and regulations -- should continue unimpeded. But shutdowns are rare and unpredictable, so we can’t be entirely sure that there will be no major interruptions. We rate his claim Mostly True.