News: Federally funded health centers face risks during government shutdown

As the government shutdown adds further strain to other revenue cuts, there are about 1,500 federally funded health centers facing significant financial challenges, KFF Health News reported. Some of these community health centers, which serve millions of low-income people, may have to cut medical and administrative staff or reduce services, their leaders say. Some may eventually close, adding pressure on already-crowded hospital emergency rooms.

These centers receive federal funds through two primary routes: grants paid in part through the federal Community Health Center Fund, and reimbursements for patients’ care through programs like Medicaid, which is jointly funded by states and the federal government. Both of these avenues face challenges, at present.

First, Congress has approved the grant money sporadically and in small amounts. Though lawmakers extended the funds until September 30, that money has now expired just in time for the government shutdown. Second, the new spending law passed by Congress (the “One Big Beautiful Bill Act”) will significantly cut Medicaid, which accounted for 43% of the $46.7 billion in health center revenue in 2023, KFF Health News reported.

In early 2024, the centers received $4.4 billion in grants. The National Association of Community Health Centers is advocating for at least $5.8 billion in grants annually for two years to keep the centers fully functional.

Funding for workforce programs also is needed to support the delivery of healthcare services as centers struggle to hire and retain workers. Typically, Congress has funded them with bipartisan support and minor fluctuations. This year, after the Trump administration froze domestic aid through a January memo, some centers were prevented from receiving already approved grant money and had to close or merge operations.

On the patient side, changes to Medicaid in President Donald Trump’s tax-and-spending law will place extra requirements for enrollees to keep their benefits, and many consumers’ costs will spike after tax credits to help pay for Affordable Care Act health insurance are set to expire at the end of the year, unless Congress renews them.

While advocating for longer-term federal funding, the centers also are looking to their community and local governments for backing. Some states have already taken action while finalizing their annual budgets and allocated money for centers, while others such as California have made their own cuts to the program in anticipation of the financial impact of Medicaid cuts.

Editor’s note: To read KFF Health News’ coverage of this story, click here.