Federal reductions may strain US healthcare workforce, boost workers’ comp, EPL exposure, Marsh’s Norris warns

By Mia MacGregor

Aug 15 - (The Insurer) - New regulatory developments introduced through President Trump's Big Beautiful Bill could worsen staffing shortages in U.S. healthcare and drive up workers’ compensation and employment practices liability claims, said Gigi Norris, commercial global industry leader and U.S. healthcare practice leader at Marsh.

“We are anticipating staffing reductions and increased workloads per worker as a consequence of these federal cuts,” Norris said.

Signed into law on July 4, the One Big Beautiful Bill Act tightens Medicaid eligibility and work requirements, narrows Affordable Care Act subsidies, delays some long-term care staffing rules and reshapes funding flows, particularly for rural providers.

As staff cover shortages, take on more responsibilities and work longer hours, workers’ compensation claims are likely to rise, Norris said.

“You’re running from patient to patient, your body is overstressed, and you are more at risk because you’re simply doing more work. You are lifting more people. So there’s just a higher exposure basis," she said.

She cited risks including musculoskeletal injuries from patient handling and slip-and-fall incidents due to fatigue.

Additionally, she noted that reliance on temporary staff or people who are cross-trained may increase injury risk, “because people won’t necessarily get the proper training or be familiar with the protocols or have practiced them”.

Beyond physical injuries, Norris warned that healthcare organizations face growing exposure to psychological injury claims as more states expand mental health coverage under workers’ compensation programs.

She also raised concerns about rising workplace violence against healthcare workers. “If there’s reduced funding, that could result in increased patient frustration, which could result in violence,” she said.

Norris also noted the potential for an increase in EPL claims.

“From a first party perspective, the projected reductions in Medicaid and federal funding, that’s going to create pressure that we think will likely lead to layoffs or reductions, and those layoffs will potentially increase wrongful termination claims, especially if protected groups like older workers, immigrants, or even women, are disproportionately affected,” she said.

“So third party EPL happens with patients, vendors or visitors who can allege something like discrimination, harassment or assault. And again, if there’s a rise in uninsured or underinsured individuals, these patients may be more distressed, and they could allege those things as well,” she added.

“We don’t think about third party EPL that much, but it certainly has the potential of happening.”

While insurers are unlikely to introduce new exclusions for these basic coverage areas, the rise in claims will inevitably affect pricing.

"As claims rise, costs rise," Norris said.

The timeline for these impacts remains uncertain, with the most severe effects expected to lag the actual implementation of funding cuts by several years.

However, Norris warned that healthcare facilities are already experiencing financial pressure from other legislative changes.

“There has been other legislation that has reduced funding in healthcare. We're already seeing facilities close, especially rural facilities," she said.