The U.S. health care sector has emerged as a surprising engine of economic growth in 2025, fueling nearly half of all new jobs created nationwide. But even as hospitals, clinics, and home health agencies scramble to hire, a wave of federal policy changes—including deep Medicaid cuts and tougher immigration enforcement—now threatens to slow this momentum, with Arizona standing out as a vivid case study of the stakes involved.
According to the latest nonfarm payroll data from the Bureau of Labor Statistics, employers added 487,000 jobs from January to August 2025, and the health care sector alone accounted for about 232,000 of those jobs—an eye-popping 48% of total job growth, even though health care employs only about 11% of all U.S. workers. As Stanford economics professor Neale Mahoney told KFF Health News, “On the labor side, health care growth is driving the economy.”
This surge has been especially pronounced in home health care, which has added nearly 300,000 jobs since 2019, reaching 1.82 million workers by August 2025. The trend reflects the aging of the U.S. population: the number of Americans 65 or older has swelled from 34 million in 1995 to 61 million in 2024, creating unprecedented demand for in-home care and medical services. Laura Ullrich, director of economic research in North America at the Indeed Hiring Lab, explained, “So many of these health care jobs are to support the growing population of older Americans. So that's not surprising that we're seeing growth there. But I think what is surprising is how lopsided it is.”
But this growth story is now under threat. In July, President Donald Trump signed the so-called “One Big Beautiful Bill Act,” a sprawling piece of legislation that slashes federal Medicaid spending by approximately $910 billion over the next decade, according to a KFF analysis of Congressional Budget Office data. The cuts are projected to cause millions to lose health insurance, with ripple effects expected to hit hospitals, nursing homes, and community health centers—especially in states like Arizona, where Medicaid is a critical lifeline for rural communities.
Arizona’s own legislative budget analysts estimate the Medicaid changes could lead to between 38,000 and 190,000 residents losing coverage due to new work and reporting requirements for “expansion population” adults—those who gained eligibility under the Affordable Care Act. The rules, set to take effect in 2027, require these adults to reconfirm their eligibility twice each year, up from the current annual check-in. By 2030, as many as 171,000 Arizonans could lose coverage, according to legislative projections.
Democratic leaders have sounded the alarm. “It threatens to shut down five rural hospitals, and mark my words, if those hospitals close, Arizonans will die, and it will cut coverage for over 365,000 Arizonans,” warned Arizona House Minority Leader Oscar De Los Santos at a campaign event in July, as reported by NPR. The Arizona Health Care Cost Containment System, the state’s Medicaid program, echoed concerns that both patients and providers will feel the squeeze, particularly in rural areas where hospitals rely heavily on Medicaid dollars.
The impact could extend beyond Medicaid. The Arizona Department of Insurance estimates that 371,000 Arizonans who buy insurance on the Affordable Care Act marketplace could see their premiums rise by as much as 55% after Congress failed to extend federal subsidies for low- and middle-income households. State budget analysts project Medicaid spending in Arizona will drop by $363 million in 2027, with $123 million of that stemming from people losing coverage. Work requirements are expected to reduce federal spending by $299 million, but these savings come with a catch: many of those losing coverage may still qualify but will fall off the rolls due to administrative hurdles, only to return later with more expensive health needs due to lack of preventive care.
“What you are likely to find when you put significant bureaucratic hurdles in front of people to retain their health coverage is that individuals who are healthy and don't immediately need to use their coverage will not jump through those hurdles and will lose their coverage,” explained Beth Kohler, representing the Arizona Association of Health Plans. “So they’ll get back on the program, and the result of that will be a higher cost within the system for everybody.”
Republicans, however, defend the changes as necessary to preserve taxpayer dollars for the most vulnerable. “We're simply saying that if you're childless and you're not working and you don't go to school and you won't look for work, well, then we're not going to have working people's tax dollars pay for you,” said state Sen. John Kavanagh (R-Fountain Hills). Congressman Juan Ciscomani, who voted for the bill, insisted, “This does not impact the population that needs it the most.”
Yet the uncertainty remains. Legislative analysts admit their estimates are “highly speculative,” and the full impact of the Medicaid cuts—and the associated federal savings—may not be known for years. Implementing the changes will also generate new administrative costs. Georgia’s work requirement program cost taxpayers nearly $87 million in its first two years, and Arizona’s Medicaid agency has requested an additional $71 million, including $19 million from the state’s general fund, to hire 320 new staff to comply with the new law.
Meanwhile, another crucial pillar of the health care workforce—immigrants—faces fresh challenges. About 18% of Americans employed in health care were born abroad, including roughly 60,000 doctors and surgeons, 117,000 registered nurses, and 155,000 home health or personal care aides, according to 2023 Census Bureau data. From February through August 2025, the federal government deported about 200,000 people, a significant uptick from earlier in the year, according to The Guardian. The number of immigrant visas issued from March to May fell by 23,000, or 14%, year-over-year, State Department data shows.
“Health care as an industry is pretty reliant on immigrant labor,” said Allison Shrivastava, an economist with the Indeed Hiring Lab. “It has a large share of non-native labor force, so it's going to be impacted more.” Shrivastava noted that while demand for doctors willing to accept visa sponsorship remains high, it’s unclear if enough candidates will take up the offers given the current political climate.
Despite these headwinds, job growth in health care is expected to remain robust in the near term, particularly among nurse practitioners, physician assistants, and home health aides, per Bureau of Labor Statistics projections. Many of these positions offer stable, often recession-proof employment. Family physicians typically earn more than $240,000 annually, registered nurses about $94,000, while home health and personal care aides earn a median of $35,000—close to the pay for waiters and waitresses. The sector has also been a boon for women, who comprise nearly 80% of health care and social assistance workers and have filled more than a million new health care jobs in the last two years.
Still, the sector’s future looks more uncertain than it has in years, as policymakers, patients, and providers brace for the real-world effects of sweeping federal reforms. As Arizona and other states grapple with the fallout, the country will be watching closely to see whether the health care jobs boom can weather the storm—or if the cracks in the system will widen, with consequences for millions of Americans.
