CERP Report: Collateral Damage: How the One Big Beautiful Bill Act Threatens the Future of Emergency Services
This commentary is notable because it takes an issue the ambulance industry has been raising for months and places it squarely in the broader national health policy conversation.
CEPR explicitly connects restrictions on Medicaid supplemental and state-directed payments with the financial sustainability of ambulance services, warning that the consequences could include fewer staffed ambulances, longer response times, service reductions, and even agency closures.
Importantly, it also recognizes that these effects extend well beyond Medicaid beneficiaries, when an ambulance disappears from a community, it is unavailable to everyone who needs it.
The article reinforces what the profession’s own cost data have demonstrated: Medicare and Medicaid reimbursement already falls substantially short of the actual cost of providing ambulance service, leaving little capacity to absorb additional reductions.
While we may not agree with every political characterization in the commentary, having an independent economic policy organization describe EMS as potential “collateral damage” of these policies significantly broadens the audience, and strengthens the case that this is a healthcare access and community infrastructure issue, not simply an ambulance reimbursement issue.
NOTE: PWW|AG has a prepared a free toolkit that agencies can use to help assess and prepare for the potential impact of the CMS Proposed Rule impacting Medicaid Ambulance Supplemental Payment/GEMT programs.
You can access the toolkit here.
Collateral Damage: How the One Big Beautiful Bill Act Threatens the Future of Emergency Services
Sep 11, 2026
On the 25th anniversary of the horrendous 9/11 terrorist attacks, a grateful nation is celebrating the bravery of the EMTs, emergency medical technicians who ran into fire and smoke-filled collapsing buildings to rescue and treat victims. It’s a moment to contemplate, as well, the less spectacular lifesaving rescues emergency ambulances and their crews make every day, coming to the aid of car crash victims and people suffering health emergencies in their homes.
But few of us are aware of the perilous financial situation facing emergency medical service (EMS) companies, made worse this year by provisions in H.R.1, the One Big Beautiful Bill Act, that limit how states can top up woefully inadequate Medicaid payments for services provided to people on their rolls. The number of emergency ambulances, the services EMTs provide, and the geographic areas served are in danger of being reduced, and some EMS companies have even had to close.
When President Trump signed the Republican-passed One Big Beautiful Bill Act (OBBBA) into law, there was plenty of attention paid to the more than $900 billion in cuts to Medicaid, the program that provides health insurance for low-income and disabled people. But there was little talk of the wider damage those cuts would have on health care services that millions of Americans not on Medicaid rely on.
Republicans were focused on a desperate need to offset massive tax breaks in the OBBBA for wealthy individuals and corporations that will reduce federal revenues by more than $3.5 trillion over 10 years. Republicans saw cutting Medicaid spending as an opportunity to reduce the federal budget deficit created by the tax giveaway at the expense of people they mischaracterized as illegal immigrants or able-bodied folks too lazy to work. If Mehmet Oz and others in the administration responsible for carrying out health policy knew enough to understand the fallout the bill’s provisions would create in other parts of the US health system, they raised no alarms. But it seems safe to assume that most Republicans voting for the Medicaid cuts had no idea that they would threaten emergency ambulance services and deprive Americans with no relationship to Medicaid of a quick response in an emergency.
To understand how cuts to Medicaid can threaten the nation’s emergency services, it’s necessary to take a brief detour into provider taxes and state directed payments.
State Provider Taxes
Medicaid payments to providers are often drastically below the cost of providing necessary medical services. One way that states and municipalities reduce this shortfall and retain critical services is through provider taxes that fund state-directed payments for these services. States are allowed to tax hospitals, clinics, emergency ambulance companies, nursing homes, Medicaid managed care organizations and other institutions that treat Medicaid patients and to use the proceeds to fund state directed payments to these providers to help fill the gap. Medicaid is a joint state-federal program and, like other state payments for the care of Medicaid beneficiaries, they are matched by the federal government, which picks up its share of Medicaid costs.
Prior to the passage of OBBBA, these taxes were limited to 6 percent of a provider’s net patient revenue. New provisions in OBBBA banned new provider taxes or increases in the rate of existing provider taxes.
In the states that expanded Medicaid coverage as part of the Affordable Care Act (expansion states), it ratcheted down the amount of net patient revenue that states could tax from 6 percent to 3.5 percent by 2034 with a few exceptions. This reduces the funds states have available to supplement Medicaid payments. Cutting provider taxes and state directed payments to Medicaid providers reduces federal spending on its match of these payments. These provisions are projected to reduce federal spending on matching funds by nearly $225.7 billion over 10 years.
On the state-directed payments side, OBBBA requires expansion states to reduce the size of these payments to providers to the Medicare payment rate and to 110 percent of Medicaid rates in the other 10 states by 2029. In some cases, Medicare payment rates fail to come close to covering providers’ costs. OBBBA applied these limits to hospital inpatient and outpatient services, skilled nursing facility services, and qualified practitioner services at academic medical centers. However, in May the Centers for Medicare and Medicaid Services (CMS) proposed a rule that went beyond these four categories and applied the limits to all services and providers by 2029. CMS projects its rule will reduce Medicaid spending by $775 billion over 10 years, with the federal government reaping two-thirds of the savings. In August, CMS finalized the rule extending these limits.
The Case of Emergency Services
The revenue for most EMS systems comes from billing insurers (commercial insurers, Medicare, Medicaid) and patients. The reimbursements from Medicare and Medicaid are dramatically short of covering actual costs. Much of the difference is made up from taxes (general revenue and property taxes as well as provider taxes and state-directed payments). Average payments by public insurers — Medicare (traditional fee-for-service and Medicare Advantage) and Medicaid — do not come close to covering the costs of emergency ambulance transport. Much higher payments from commercial insurers bring average revenue closer to average costs.
In December 2024, CMS released the first report on the Medicare Ground Ambulance Data Collection System (GADCS) based on an analysis by RAND Health Care. The report is based on survey data collected from 3,694 ambulance agencies for the years 2022 and 2023. It presents aggregate costs and revenues for Emergency Medical Services documenting the extent of the shortfall. The RAND report also breaks down aggregate costs into its component parts. Labor costs are the largest category. In 2022-2023, they were 69.4 percent of the $27.2 billion of aggregate ground ambulance costs for the agencies included in the survey. Labor costs include administration facilities staff as well as EMTs and EMT-paramedics. Median aggregate ground ambulance labor expenses were $551,000 while average ground ambulance labor expenses were many times larger at $3.65 million. This is likely due to a small number of EMS organizations with labor costs that were much higher than the typical organization.
The high share of labor costs doesn’t mean that EMTs are highly paid workers, however. On the contrary, despite their skills and the stress of their jobs, their pay is quite modest. The Bureau of Labor Statistics’ (BLS) Occupation Employment Survey (OES) reports that median pay of EMTs was just $38,930 in May 2023.

A January 2025 webinar that featured the lead author of the RAND report presented average costs and reimbursements for ambulance transport and documents the gap between these costs and reimbursements to EMS agencies. RAND found that nationally, the average cost of an ambulance transport across all types of emergency medical systems was $2,673. The average reimbursement was $1,147, an under-reimbursement of $1,526 per transport. Medicare reimbursements were much lower, averaging just $329 — an underpayment of $2,334.
Data for New York state from the American Ambulance Association drives the disparity home. While Medicare reimbursements are higher in New York than the national average, they are still far below the costs of emergency ambulance transport. Medicare reimbursement for a basic level emergency service (BLS) was $507 in 2026 and for an advanced level emergency service (ALS) was $602. Importantly, the table below also presents Medicaid reimbursements for the two levels of emergency services: they are $250 and $296, respectively. This is just under half the Medicare reimbursement rates, a drastically low payment rate.

As the reimbursement rates show, the situation was already dire for emergency ambulance services before the development of new CMS rules in the OBBBA — rules that are even more draconian than called for in the legislation. Emergency ambulance deserts were already becoming apparent as EMS agencies closed, especially in rural and super rural areas where they are especially needed and often function as the only medical facility people can access in a medical emergency. They may become more prevalent as states’ ability to supplement Medicaid reimbursements is reduced.
Emergency ambulance services provide a sense of security in rural areas devoid of the medical resources available in cities. The limits on how states supplement Medicaid payments mean that some EMS agencies will be collateral damage as the Trump administration shreds the social safety net and cuts programs that provide essential health services that the US can well afford. Reductions in supplemental payments may lead ambulance agencies in rural areas to cut services or the number of ambulances, increasing response times when minutes may mean the difference between life and death. Emergency ambulance services may even find that they can’t make the math work and close down.
JD Vance, who cast the deciding vote for the OBBBA, ignored the effects of cuts to Medicaid on health care for the many folks in Appalachia and elsewhere who rely on the program. But he probably didn’t consider the effect of the cuts on the wealthy people with second and third homes in remote scenic areas. These people, too, may find there isn’t an ambulance with a crew of EMTs available to stabilize them after a traumatic event.




