Healthcare Drives U.S. Job Growth, but Cuts Loom

More than half of new jobs in January came from the healthcare sector, but looming federal spending cuts could threaten this trend.

Published on Feb. 11, 2026

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The U.S. labor market saw significant job gains in January, with over half of the 130,000 new jobs coming from the healthcare industry. Analysts attribute this growth to an aging population and expanded healthcare coverage under the Affordable Care Act. However, upcoming cuts to federal healthcare spending under the One Big Beautiful Bill Act could reverse this trend, with hospitals already facing rising expenses and some academic health centers implementing layoffs and hiring freezes.

Why it matters

The healthcare industry has been a key driver of job growth in the U.S. over the past year, but this could be threatened by looming federal spending cuts. These cuts could lead to job losses in the healthcare sector, which would have broader implications for the overall labor market.

The details

The January jobs report showed that 82,000 of the 130,000 new jobs were in the healthcare industry. Analysts attribute this growth to an aging population and expanded healthcare coverage under the Affordable Care Act. However, the One Big Beautiful Bill Act signed into law by President Trump last year is projected to reduce federal spending on Medicaid by $1 trillion over the next decade. This, along with other healthcare spending cuts, is expected to result in job losses, with some hospitals and academic health centers already implementing layoffs and hiring freezes.

  • The U.S. Labor Department reported the January 2026 jobs data earlier this week.
  • The One Big Beautiful Bill Act was signed into law by President Trump last year.

The players

One Big Beautiful Bill Act

Legislation signed into law by President Trump that is projected to reduce federal spending on Medicaid by $1 trillion over the next decade.

Affordable Care Act

Healthcare reform law signed into law by President Obama in 2010 that expanded coverage and access to individual commercial health insurance and allowed states to expand Medicaid.

Kaufman Hall

A Vizient company that published a report on rising expenses facing hospitals, including from bad debt, uninsured patients, and charity care.

Association of American Medical Colleges (AAMC)

An organization that published a report on academic health centers cutting jobs and freezing hiring due to federal budget cuts.

Vanderbilt University Medical Center (VUMC)

A healthcare system that is planning up to 650 layoffs.

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What’s next

The upcoming federal budget negotiations will be crucial in determining the extent of healthcare spending cuts and their impact on the industry's workforce.

The takeaway

The healthcare sector has been a bright spot in the U.S. job market, but upcoming federal spending cuts could jeopardize this trend. Hospitals and academic health centers are already feeling the strain, highlighting the need for the industry to adapt to a changing funding landscape.