Proposed budget cuts could overwhelm ERs and disrupt health care systems

A quiet but impactful policy change within the "One Big Beautiful Bill Act" threatens to upend the U.S. health care system, potentially leaving emergency rooms (ERs) overwhelmed and nursing homes shuttered. The legislation, passed by Congressional Republicans, reduces the nationwide provider tax from 6% to 3.5% over the coming years—a change that could ripple through the interconnected health care network and severely impact access to care for millions of Americans.

The provider tax: A critical but overlooked link

The provider tax is a vital mechanism used by 47 states to fund Medicaid, the program providing health care for millions of children, seniors, and low-income families. Hospitals contribute to this tax, enabling states to unlock federal Medicaid funds that flow back into ERs, hospital systems, and nursing homes. This funding keeps ERs staffed, hospital beds available, and nursing homes operational, ensuring the health care system runs smoothly for patients with or without private insurance.

However, the proposed tax cut is more than a budget adjustment—it’s a seismic shift that could destabilize the system. According to researchers at Brown University's School of Public Health, the bill could lead to the closure of over 600 nursing homes nationwide. These facilities care for vulnerable populations, including seniors, adults with disabilities, and stroke survivors. Their loss would create a domino effect, jamming hospital systems and, ultimately, ERs.

A cascade of consequences for emergency care

When nursing homes close, hospital beds fill with patients who have nowhere else to go—those recovering from surgeries, strokes, or serious illnesses. As a result, ERs become overcrowded, leaving patients waiting for hours in hallways or packed waiting rooms. Research has shown that crowded ERs not only lead to longer wait times but also increase the risk of missed diagnoses and worse outcomes for time-sensitive conditions such as heart attacks and strokes.

In rural communities, the stakes are even higher. If nursing homes or local hospitals shut down, the nearest ER could be an hour or more away, turning what might have been a manageable emergency into a life-threatening situation.

Who is most affected?

The cuts will hit hardest for low-income families and individuals relying on Medicaid, as well as those with chronic conditions. However, the disruption will affect everyone. Whether you’re a CEO or a cashier, when ERs are overwhelmed, no one receives care quickly.

Few solutions, significant risks

States may attempt to offset the lost Medicaid funding by introducing new taxes or provider fees, but this will likely lead to wide disparities in health care access based on geography. Some states may preserve their ER and nursing home systems, while others may face severe strain. Without a coordinated federal response, the promise of an accessible ER for emergencies—a cornerstone of the U.S. health care system—will weaken.

A fragile future for health care

As summer brings backyard barbecues and family gatherings, it’s worth considering what provides real peace of mind: a health care system ready to respond when the unexpected happens. If hundreds of nursing homes close and ERs become overcrowded in the months ahead, that promise of reliable care will be harder to keep.