Why healthcare spending is at the center of the US government shutdown battle

If the federal government shuts down on Wednesday, it will likely be, in part, due to a battle between Democrats and Republicans over healthcare spending.

The Democrats have said that they will not vote for legislation to keep the government open unless Donald Trump and Republicans, who hold the majority in Congress, agree to reverse cuts to Medicaid and extend subsidies for Affordable Care Act plans.

In June, the US president approved legislation he calls his “big, beautiful bill”, which the Congressional Budget Office estimated would reduce federal Medicaid spending by $793bn and increase the number of uninsured people by 7.8 million.

The savings in federal Medicaid spending will largely come from the implementation of the new requirements, which include completing 80 hours of work or community service activities per month, or meeting exemption criteria.

The law also means that the premium tax credits implemented during the Covid-19 pandemic for insurance purchased through the Health Insurance Marketplace will expire at the end of 2025. That would make coverage more expensive and lead to 3.1 million more people without health insurance, according to the CBO.

“We are not going to support a partisan Republican spending bill that continues to gut the healthcare of everyday Americans,” Jeffries said following a negotiation with Trump and Republican leaders on Monday.

The Senate minority leader, Chuck Schumer, also said after the meeting that the Democrats had talked about the impact of the cuts in healthcare spending on rural hospitals and individuals.

Based on Trump’s “face and the way he looked, I think he heard about them for the first time”, Schumer said.

Meanwhile, Trump said during an Oval Office press conference on Tuesday that if the parties can’t reach an agreement, “we can do things during the shutdown that are irreversible, that are bad for them,” Trump said while speaking to reporters in the Oval Office on Tuesday afternoon. “Like cutting vast numbers of people out, cutting things that they like, cutting programs that they like.”

He did not mention Medicaid or the Affordable Care Act but said: “We can do things medically and other ways, including benefits.”

Still, there could be an opening for negotiation. The Senate majority leader, John Thune, said on the Senate floor on Tuesday that the Democrats should vote to keep the government open until 21 November and that he would be happy to fix the “ACA credit issue” before the credits expire at the end of the year.