Columbus, Ohio — Ohio is staring down a projected $33 billion loss in Medicaid funding over the next decade — and the state’s nursing homes are directly in the line of fire.
Health care policy analysts are warning that the federal reconciliation bill signed last year, known as the One Big Beautiful Bill Act, will force Ohio to dismantle key funding mechanisms that have long kept its Medicaid program afloat. The ripple effects, they say, will reach every nursing home in the state.
“In total across all the provisions, Ohio is expected to lose about $33 billion over the next decade for the Medicaid program,” said Brian O’Rourke, a health care policy analyst at the Health Policy Institute of Ohio.
Provider Taxes Are the Linchpin
The biggest source of pain isn’t a straightforward spending cut — it’s what happens to provider taxes. These state-imposed levies on hospitals, nursing homes, and health insurers have quietly been one of the primary tools Ohio uses to generate its share of Medicaid funding. When the state collects those fees and draws down federal matching dollars, facilities effectively get more back than they pay in.
The new federal law puts that arrangement under serious pressure. It prohibits new or increased provider taxes as of July 2025, restricts the use of special waivers Ohio previously relied on, and gradually lowers the maximum allowable tax rate from 6% down to 3.5% by 2031.
Ohio has two provider taxes directly in its crosshairs.
First, the state’s health insuring corporation franchise fee — a tiered tax on Medicaid managed care organizations — is no longer compliant with federal rules. Ohio has until June 30, 2027, to either make it uniform or eliminate it entirely. If it goes away, Ohio loses $640 million in state revenue annually, plus $1.5 billion in federal matching funds.
Second, Ohio’s hospital franchise fee was raised just before the new law passed. That timing now means it’s subject to mandatory phase-down requirements — a loss the state estimates at $1.2 billion through 2032, or roughly $220 to $280 million per year.
Why Nursing Homes Are Watching Closely
Nursing homes have skin in this game in two ways. They pay their own provider taxes, which help fund the Medicaid program they depend on. And they rely on Medicaid reimbursements to cover the majority of their residents — a population that skews low-income and medically complex.
When state Medicaid budgets take hits of this magnitude, the first things to go are reimbursement rate increases. Ohio’s nursing homes already know this dynamic well — the state has had ongoing disputes about overdue Medicaid payments, with operators paying taxes on money the state still owes them.
Now, with nearly $2 billion in annual state Medicaid revenue potentially wiped out, the pressure on Ohio’s long-term care sector is about to intensify.
A Decision Point for State Lawmakers
Ohio legislators will have to weigh difficult options. They can try to restructure provider taxes to comply with the new federal requirements, find alternative revenue sources, or accept the cuts and reduce benefits and reimbursements accordingly.
Every state except Alaska uses provider taxes in some form, so Ohio’s challenge isn’t unique — but the scale of the projected losses is significant. And how the state responds will largely determine whether Ohio’s nursing homes can hold the line on staffing, quality, and access over the next several years.
The timeline is tight. The health insuring corporation franchise fee deadline is June 2027. After that, the losses become permanent.
