The One Big Beautiful Bill Act (OBBBA) could have major implications for employers of low-wage and part-time workers, especially in sectors like long-term care, including nursing homes.

By imposing new Medicaid work requirements and more frequent eligibility checks, the law risks disrupting employee stability and increasing workforce turnover. The bill’s Medicaid reforms and greater scrutiny on immigrant labor, threaten to destabilize segments of the labor market by increasing health care coverage loss, reducing job flexibility, and placing new compliance demands on employers – further complicating hiring and retention.

Rural and underserved areas, where access to care and workforce supply is already limited, may be hit hardest.

“I’m not feeling a lot of angst at this point about the big, beautiful bill. We’re preparing for it as a state, for sure, but what I do see as impacting us more is the Medicaid expansion population, which could impact our labor force,” Jennifer Robinson, president of SanStone Health and Rehabilitation. “That’s more where I’m anticipating seeing some changes in our labor force being impacted financially, for their children’s health care, for maybe their own health care.”

In North Carolina, where SanStone operates 20 rehabilitative care facilities, Medicaid expansion has helped cover low-wage workers who previously fell into a coverage gap – earning too much for traditional Medicaid but too little to afford employer-sponsored insurance. This expansion particularly benefited line-level staff like housekeeping and dietary workers, Robinson said. 

However, with changes under the new federal law, many of these workers may lose their Medicaid eligibility, and they could be forced to spend more of their income on employer-sponsored plans or marketplace insurance, reducing their take-home pay, Robinson explained.

“I don’t know that it’s affecting the CNA staff as much anymore, just because of the large wage increases that we’ve seen since the pandemic, but there are some line level staff who may have benefited from this Medicaid expansion plan, and so now it’s going to put them back in a situation where they either don’t have health insurance and have to spend some of their wages for health insurance,” she said. “It’s money out of their pocket. The bottom line is that they were receiving Medicaid benefits that they will probably no longer be eligible for.”

And if workers lose Medicaid coverage, they may forgo needed care, leading to higher illness-related absences and reduced productivity.

Many workers, particularly those with variable schedules or chronic health issues, may lose coverage due to missed paperwork or failure to meet the 80-hour monthly work threshold. This could lead to a stressed out workforce and increased absences, as uninsured workers delay or skip necessary medical care.

Employers may also face indirect financial pressure. As more employees lose Medicaid coverage, demand may grow for employer-sponsored insurance, straining businesses that already operate on thin margins amid employers having to foot the extra cost of health insurance. Additionally, operators could be required to verify employees’ work hours for Medicaid compliance, creating administrative burdens and potential liability risks – especially for those managing part-time or float staff.

“If they’re working more than 30 hours, we’re required to offer them health insurance benefits. So depending upon whether you’re self funded or fully insured, the employers do [cover] a large portion of the employee’s premium,” she said. “Employees themselves have a small portion of their premium to pay, so it could potentially impact the employers on an increased amount of premiums we would need to pay for their health benefits.”

Moreover, fixed work-hour requirements could shrink the available labor pool for agency workers, although the use of agency labor has shrunk for the sector overall in the last year or so.

The Medicaid reductions significantly impact the Affordable Care Act (ACA) expansion population spread out across most states, including Illinois and North Carolina. These states chose to extend Medicaid eligibility under the ACA to adults under 65 years of age with incomes up to 138% of the federal poverty level – including low-income adults without children, who were previously often excluded.

“There’s a pot of money that comes from the feds to the state for Medicaid [and] the state has to decide, ‘do we want to let those people [previously on ACA] go without health care, or do we want to shore up this program with more state funding?’” Ron Nunziato, senior director of policy and regulatory at the Health Care Council of Illinois, told Skilled Nursing News earlier. “That’s the fear – we never really know until it’s all done, and how it’s going to affect us and what the state is going to do in response to that cut, or potentially more cuts.”

In the meantime, Nunziato said, Illinois suffers from a shortage of workers, especially in its rural parts, and the government will need to do more.

“These facilities [in Illinois] are struggling to find people that want to work and work in these environments, and so we’re kicking up our workforce development to help our [nursing home operator] members, but we believe we really need more focus from governmental entities,” he said.

Federal funding for loan forgiveness programs tied to long-term care service, and career-path initiatives starting in high school to grow the CNA-to-RN pipeline in the midst of changes brought on by the cuts inherent in the OBBBA, could be really useful, he said.

The expansion-state-specific provisions – including work requirements, more frequent eligibility checks, and reduced funding matches – will account for roughly $427 billion in cuts, according to the KFF News.

The goal of the expansion was to reduce the number of uninsured adults, especially in working poor populations who earned too much for traditional Medicaid but too little for marketplace subsidies.

Immigrant workers

Aside from making workers ineligible for ACA coverage, policy shifts towards greater scrutiny of immigrant labor could also affect such workers in nursing homes.

Immigrant workers make up about 28% of the direct care workforce in long-term care, and specifically account for roughly 21% of staff in nursing facilities, according to a KFF analysis. In nursing homes, that translates to over one-fifth of nurse aides and support workers being foreign-born. For certified nursing assistants (CNAs), immigrants comprise around 19% nationally.

Overall, immigrant workers face a two-pronged threat: reduced eligibility due to new work mandates and documentation hurdles, and shrinking safety nets at both federal and state levels. This impacts their access to health care and creates broader workforce instability across essential sectors.

In states like Florida, where the workers are over 25% even though it’s not impacted by the cuts to the ACA expansion, the increased scrutiny via additional funding and cuts to health care coverage for non-citizens could result in worker shortages.