After years of financial strain, workforce shortages, and heightened risk exposure in the wake of COVID-19, the recently passed Big Beautiful Bill has added a new layer of complexity for US healthcare providers.
Its regulatory changes are expected to reshape funding streams, workforce models, and liability exposures across the sector. This creates both challenges and opportunities for insurers and brokers, according to Gigi Norris (pictured), commercial global industry leader and US healthcare practice leader at Marsh.
“Providers are already struggling, and this bill is going to significantly pressure them financially,” Norris told Insurance Business.
Workforce shortages are the central risk driver for healthcare organizations under the new bill. Cuts to Medicare and Medicaid reimbursement, coupled with stricter immigration rules that reduce access to international healthcare workers, are expected to deepen staffing challenges.
“Labor costs typically account for more than half of a hospital’s budget,” Norris said. “So, when financial strain sets in, workforce reductions and layoffs are often the first measures taken. That creates a domino effect across the entire healthcare delivery system.”
Overstretched employees are more likely to suffer injuries such as musculoskeletal disorders, slips, and falls. At the same time, the pressure on staff to do more with less is fuelling rising burnout and stress, which leads to a wave of workers’ compensation claims.
“Mental health issues are on the rise, and some states now allow mental health claims under workers’ compensation,” Norris said.
Healthcare organizations are responding with workforce redesign strategies: finding ways to help employees work at the top of their licenses, reducing administrative burdens, and deploying technology to drive efficiency.
But Norris stressed that retention requires more than efficiency. “Staff want to know their well-being and safety are taken seriously,” she said. “That’s especially important given the significant rise in workplace violence against healthcare workers since the pandemic. Creating a safe, supportive environment is critical for retention and psychological safety.”
As staffing shortages intensify, maintaining patient safety will become even more challenging, particularly in long-term care facilities that depend heavily on Medicare funding. With fewer staff on hand, the risk of errors and lapses in care grows, raising the likelihood of professional liability claims.
For brokers, Norris said the focus should be on helping healthcare clients strike the right balance between risk retention and transfer. “Healthcare professional liability coverage is expensive,” she said. “Brokers need to ensure their clients are buying at an optimal point, retaining the right amount of risk without overpaying for coverage.”
The hard market in healthcare professional liability is expected to persist, Norris added, making efficiency in coverage design more critical than ever.
With budgets under strain, many hospitals will consider workforce reductions. But layoffs carry their own exposures. “First-party EPL claims are a real concern. If employees perceive that layoffs were discriminatory, those claims can be costly,” Norris said.
At the same time, third-party EPL risks are on the rise. Patients, visitors, or family members who feel discriminated against – especially in the context of new eligibility restrictions for certain types of care – may also bring claims.
For brokers, this means ensuring clients have the right EPL coverage in place and that HR and legal teams are properly trained to handle sensitive workforce issues in today’s environment.
The Big Beautiful Bill stopped short of imposing a federal moratorium on state-level artificial intelligence (AI) regulations, leaving healthcare organizations to navigate a patchwork of rules. This regulatory uncertainty complicates efforts to deploy strategically and ethically, and it comes at a time when firms are bolstering hiring and workforce management practices with AI.
Norris warned that poorly managed AI rollouts can introduce bias into healthcare data systems, which then opens doors to wrongful termination or discrimination claims. Brokers should expect clients to seek guidance not only on cyber and tech liability coverage, but also on the broader risk implications of AI adoption in healthcare.
“Many organizations are using AI for efficiency in hiring and workforce management. But if those systems carry bias, they can lead to systemic discrimination,” Norris said. “Healthcare organizations need clear digital roadmaps, even though it’s difficult right now.”
Beyond workforce and liability exposures, the Big Beautiful also cuts funding for academic research and imposes tariffs on medical equipment. Norris anticipates this financial strain could accelerate consolidation across the industry.
Amid a patchwork of challenges, healthcare clients will be relying more heavily than ever on informed, proactive risk management support. That means:
“Healthcare organizations need to be as strategic and resourceful as possible in this environment,” Norris said. “But they also need to be compassionate: employers to workers, patients to providers, and providers to patients. We all need to try to take care of each other.”
