The hidden fallout of the Big Beautiful Bill for America’s travel nurses

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The hidden fallout of the Big Beautiful Bill for America’s travel nurses

On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (H.R. 1). On its surface, the sweeping legislation covers a wide range of fiscal and social policy changes: deep cuts to Medicaid, a new rural hospital support fund, adjustments to overtime taxation, changes to immigration fees, and tweaks to provider tax rules.

For most Americans, the bill’s impact will be felt through changes to coverage eligibility, work requirements, and healthcare access. But for one critical segment of the healthcare workforce—the nation’s travel nurses—the ripple effects could prove especially consequential, Vivian Health reports.

Travel nursing has long served as a release valve for staffing shortages, ensuring hospitals can respond to patient surges, fill persistent vacancies, or stay afloat when local recruitment falls short. Yet because this workforce is highly sensitive to shifts in patient demand, budgets, and regulatory pressures, even indirect policy changes can alter the terrain.

Here’s how H.R. 1 could reshape travel nursing across the U.S.:

Medicaid Cuts and Work Requirements Reduce Hospital Demand

Perhaps the most headline-grabbing provision is the bill’s $1 trillion reduction in Medicaid spending over the next ten years. According to the ANA, this could lead to coverage loss for an estimated 11-12 million people by 2034.

The new law makes some significant changes to how Medicaid is funded and how people stay enrolled. For states, revenue tools are getting tighter: Expansion states will see a gradual reduction in the amount they can raise through provider taxes, and payments to hospitals will now be capped at Medicare rates in expansion states and slightly above that in non-expansion states. At the same time, the temporary federal incentive that encouraged states to expand Medicaid under the American Rescue Plan will end in 2026, meaning less federal money flowing into state budgets.

For beneficiaries, the rules will feel stricter. Low-income adults may now face cost-sharing of up to $35 per service, and starting in 2027, most adults will need to work, volunteer, or attend school at least 80 hours a month to keep coverage. Eligibility renewals will happen every six months instead of once a year, raising the chances that people could experience gaps if paperwork isn’t completed on time. Retroactive coverage is also being shortened, meaning patients and providers will have less financial protection for care received before enrollment. Additionally, changes designed to simplify enrollment in Medicaid and related programs have been delayed until 2035.

For nurses, the Medicaid changes are likely to ripple through the workforce in several ways. With states receiving less federal support and new limits on provider taxes and payments, hospitals—particularly safety-net and rural facilities—will face tighter budgets. The ANA warns this could translate into staffing cuts, hiring freezes, or layoffs, especially for advanced practice nurses, and heavier workloads for those who remain. At the same time, more frequent eligibility checks, new work requirements, and higher patient cost-sharing may reduce coverage for millions, which could mean fewer insured patients seeking care, and more uncompensated care straining hospital resources.

Overtime Deduction: A Financial Relief, But Not a Job Driver

On the surface, one of the more nurse-friendly provisions is the new overtime pay tax deduction. Beginning in 2025, workers can exclude up to $12,500 in overtime pay from federal taxable income (or $25,000 for joint filers). For individual nurses, this means a bigger paycheck when shifts stretch long. For permanent staff, it could help offset burnout-related turnover. For travel nurses, who already command premium rates, the deduction adds another incentive to log extra hours.

That said, this tax benefit doesn’t influence how hospitals hire. Employers are unlikely to adjust pay rates based on a nurse’s personal tax status, and travel nurse agencies won’t change contract volumes because of it. In short, while this deduction boosts income, it doesn’t alter the demand equation.

An Outsized Impact on Travel Nurses in Rural Healthcare

To mitigate the losses from various Medicaid cuts, lawmakers created the Rural Health Transformation Program, a $50 billion fund disbursed between 2026 and 2030 (roughly $10 billion annually). The money will be split: half distributed equally among participating states, and half allocated based on rural population and facility needs.

However, experts caution that these funds won’t be nearly enough to offset the losses. By some estimates the program would cover at most just over one third (37%) of the estimated loss of federal Medicaid funding in rural areas from OBBBA. Medicaid accounts for nearly 45% of rural hospital revenue, and a funding gap of this magnitude raises the risk of widespread closures.

Fewer patients means lighter caseloads, smaller budgets, and less need for supplemental staffing. For travel nurses who have historically been deployed to rural or underserved facilities, this could translate into fewer contracts and reduced regional demand. “I think ultimately patient care will suffer,” says Rachel Norton, RN, BSN who advises Vivian Health on workforce trends. “I suspect [hospitals] will try to further reduce temporary, expensive staff, and instead look internally to solve the problem. Whether this means bigger patient ratios, more floating for nurses, or the option to join an internal float pool, in the end cutting funding to healthcare affects the patients most.”

Urban and suburban hospitals may feel the effects differently. While their overall patient volume could decline, many already face structural staffing shortages—meaning travel nurses may still be necessary to keep units open, even with reduced utilization. Observers note Medicaid work or volunteering requirements will reduce healthcare utilization among vulnerable populations in low-income rural areas.

Immigration Fee Increases Boost Demand for U.S.-Based Travel RNs

Another quiet but significant change is the bill’s increase in USCIS fees for immigration applications, including the EB-3 visa category often used to recruit foreign-trained nurses. The fee hikes don’t change quotas or processing times, but they do raise the cost of bringing international nurses into the workforce. For staffing agencies and hospital systems, this creates additional financial friction—especially at a time when labor costs are already at historic highs.

If fewer foreign nurses are recruited, agencies may lean more heavily on domestic travel nurses to fill gaps. That could mean stronger demand for U.S.-based travel RNs in some markets, even as rural demand wanes.

Uncertainty About How Healthcare Employers Will React

One area that might have worried hospital administrators—but didn’t materialize—is regulation of staffing or transparency. The final legislation contains no new federal staffing ratio mandates, wage transparency rules, or restrictions on travel nurse agencies. This leaves hospitals free to continue using travel nurses as needed, governed only by market conditions and state-level regulations. For agencies, it also means business as usual: no added reporting requirements, caps, or labor restrictions that could have cut into demand.

Uncertainty lies in how hospitals will respond to shrinking budgets. It’s not yet clear how the bill’s reductions to federal funding streams and increased cost pressures on providers will be distributed: will administrators pull back on permanent staff, on local contracts, or on travel assignments? Rural hospitals already face persistent shortages, and the new $50 billion Rural Health Transformation Program—while designed to support staffing and recruitment—may not be enough to fully offset Medicaid losses. In practice, many rural facilities may still rely on travel nurses simply to keep services running.

The tax change on overtime pay adds another wrinkle. By allowing nurses of all types—permanent, contract, or travel—to take home more from extra shifts, it provides an individual financial benefit without directly lowering hospital labor costs. That makes it difficult to see how employers could reduce bill rates without cutting into compensation. The likely outcome, at least in the short term, is continued pressure on budgets with employers weighing which staffing channels to scale back, and which they can’t afford to lose.

The Bottom Line: Indirect Impact, Lasting Uncertainty

H.R. 1 doesn’t explicitly target travel nursing. But its indirect effects—through Medicaid funding, patient coverage, immigration costs, and regional hospital finances—could reshape the landscape dramatically.

The bottom line for healthcare employers and staffing agencies is uncertainty. Travel nurses remain vital in bridging workforce gaps, but the demand curve is likely to look very different over the next decade. Rural hospitals may fade from the map, urban centers may lean more heavily on contract staff, and agencies will need to navigate a workforce in flux.

For now, the best advice is vigilance. Stakeholders should closely monitor:

• Medicaid uptake trends under new eligibility rules.
• Rural hospital closures and state-level funding decisions.
• Shifts in foreign nurse recruitment pipelines.

Travel nursing has always been about flexibility. In the wake of H.R. 1, flexibility will be required not just of nurses—but of the entire healthcare system that relies on them.

This story was produced by Vivian Health and reviewed and distributed by Stacker.