U.S. Health Care Jobs Growth Faces Pressure from Immigration and Medicaid Cuts
The U.S. health care sector has been a significant contributor to employment growth in 2025, accounting for 48% of job gains between January and August despite representing only 11% of total employment. This growth has been particularly strong in home health services, hospitals, and doctors' offices, driven by rising demand from an aging population. However, the sector faces potential challenges from federal policy changes that could inhibit future job expansion.
Recent immigration enforcement efforts have raised concerns about the availability of foreign-born health care workers, who comprise nearly 18% of the health care workforce. Noncitizen health care employees, including doctors, nurses, and home health aides, may be vulnerable to deportation or deterred from entering the U.S., which could reduce the labor supply amid already high demand.
Simultaneously, the federal government has enacted substantial cuts to Medicaid, the $900 billion per year health insurance program that supports millions of low-income Americans. These Medicaid spending reductions, totaling approximately $910 billion over a decade, are projected to decrease health insurance coverage and force health care providers to manage higher uncompensated care costs, potentially leading to service reductions and job losses in sectors like hospitals and nursing homes.
Analyses predict that states like California could experience thousands of lost jobs, particularly in health care, due to these Medicaid cuts. The decrease may not translate directly into layoffs but could slow job growth and strain health care organizations financially.
Labor market data show mixed signals; while hiring demand remains generally above pre-pandemic levels, recent months have seen softening in health sector job openings. There is uncertainty about the timing and extent of the impact from policy changes on employment trends.
Despite these headwinds, projections indicate strong continuing demand for advanced practice providers such as nurse practitioners, physician assistants, and home health aides. These roles often require specialized education and offer higher wages compared to lower-skill health care positions, which tend to have lower median earnings.
Workforce demographics highlight the significant participation of women in health and social assistance jobs, comprising nearly 80% of workers and accounting for a majority of recent job gains in the sector.
The sector’s resilience is partly attributed to the consistent demand for health care services driven by demographic factors like the aging baby boomer generation, which is increasing the population of Americans aged 65 and older.
Overall, health care remains a key economic driver, but immigration restrictions and Medicaid budget cuts pose critical challenges to sustaining its job growth momentum. Stakeholders in health insurance, provider networks, and policy compliance should monitor developments closely to anticipate labor market impacts and adapt workforce strategies accordingly.