Dispute Over Obamacare Subsidies and Immigration Sparks Government Shutdown

Last night at midnight Eastern Time, the federal government shut down after lawmakers failed to agree on a continuing resolution—a temporary funding measure—before the October deadline. The shutdown affects non-essential government operations and puts hundreds of thousands of federal workers on furlough. Although Republicans hold a majority in the U.S. House and Senate, they do not have the required 60 Senate votes to overcome a Democratic filibuster.

At the core of the shutdown was Democratic insistence on maintaining funding for certain Affordable Care Act (Obamacare) tax subsidies on health insurance premiums. The credits expire at the end of 2025 and could see premiums spike 75 percent for up to 21 million enrollees, according to Democratic lawmakers.

Republicans, however, reject bundling the Obamacare tax subsidies in the continuing resolution and instead argue that funding should be negotiated separately as part of the broader federal budgeting process. They also claim that by failing to allow the passage of the continuing resolution, Democrats are shutting down the government in order to ensure healthcare funding for illegal immigrants.

The claim that maintaining funding for Obamacare tax subsidies benefits illegal aliens is a complex one. While non-citizens cannot be directly covered by Obamacare under federal law, coverage does extend to them under certain circumstances. For example, states must provide emergency medical care under Medicaid, and certain hospitals that serve a large number of uninsured individuals are granted additional federal payouts—a program Democrats are demanding be extended in the resolution.

In August, a Congressional Budget Office (CBO) report estimated that as many as 1.4 million non-citizens could be benefiting from Obamacare tax credits. Republicans say that Democratic-created loopholes are allowing illegal immigrants to sidestep federal law. Additionally, states themselves, such as New York and California, sometimes have Medicaid-style programs that do extend to illegal immigrants and are partly financed by the federal government for emergency care.

Democrats are focusing on possible cost increases to citizens should Republicans ultimately allow tax credits to lapse. They argue that illegal immigrants are not benefiting from Medicaid or Obamacare, and that the non-citizens referred to by the CBO are primarily legal immigrants. Democrats also clarify that their demands for the continuing resolution do not include any change to Medicaid eligibility.