2025 was a great year for long-term care. Census was up, the workforce kept coming back, the feds dropped the staffing mandate, and most states delivered acceptable Medicaid increases. But 2025 is no more. What will 2026 bring? There are five issues that will decide our fate in 2026.

Here they are and our prospects on each.

1.      State Medicaid Rates. Duh! Obviously, this is a big deal every year. But, before you are too hard on me, this is THE issue in 2026. This is not a normal year when we worry about Medicaid some of the time. This year we have a big problem, all of the time. Many states are experiencing huge budget deficits. Some are facing their largest deficits in history. California, for example, has a shortfall of around $20 billion and has already spent most of its reserve. 

Unlike the feds, the states MUST balance their budgets. It’s required. As a result, all programs that states fund are at risk, and skilled nursing facilities (SNFs) are no exception. Already, multiple states have announced Medicaid cuts that include SNFs. Idaho and North Carolina announced SNF cuts last year. Others will follow suit. 

The ability of the SNF state associations to fight off these cuts, and hopefully get modest increases, will be the single biggest driver of whether 2026 is a great year, a terrible year, or somewhere in between. 

My prediction is that in most states, the providers and associations will prevail and avoid rate disasters. But in the states with weaker associations, and/or divided providers, there will be painful cuts. 

2.      Census. From 2021 to 2025, we’ve seen incredible census growth. Nationwide census has returned to pre-pandemic numbers, and that should continue. The oldest baby boomers turn 80 this month and tens of millions will follow them over the next 20 years. Yes, SNF utilization will continue to decline. But the number of facilities is slowly dropping, and the 80-plus crowd truly is a tsunami for our sector. I believe we will see 1 percent overall census growth in 2026, and that’s huge. For the average facility that is $100,000 a year in revenue, with almost all of that dropping to the bottom line. 

3.      Interest Rates. Another reason 2025 was a great year was the decline in rates. HUD loans started the year at almost 7 percent and ended in the mid-5’s. The math is simple.  For a building with $10 million in debt that decline in rates amounts to $150,000 a year. This happened mainly because the fed lowered rates three times in 2025. What will happen in 2026? My guess is President Trump continues to move the fed toward rate cuts, but the HUD rate doesn’t react much. Providers will be able to close HUD deals in the 5’s, but probably not much lower. 

4.      Workforce. We continued to see improvement in the workforce in 2025, and we are essentially back to pre-pandemic employment levels. In the latest jobs report measuring November 2025 employment, the Bureau of Labor Statistics (BLS) said SNFs added 8,400 jobs in November when compared to October of last year. And on a year-to-year basis, SNFs employed 60,000 more people in November 2025 when compared to November 2024 at 1,568,500 vs. 1,508,500. My expectation is the economy continues to slow and this trend continues. Your ability to hire and retain workers should improve in 2026.

5.      Federal Reimbursement Issues. This was the top issue in 2025 with the proposed federal Medicaid cuts. It’s not the top issue in 2026 but it’s still important. The Centers for Medicare and Medicaid Services will announce in May what the Medicare Part A rate will be on Oct. 1, 2026, and for the next year. The American Health Care Association has been very good at getting rate increases for the last 15 years and I expect that to continue. An increase in the 3 percent or so range is likely.

In addition, there are five other issues worth watching. Here are the honorable mentions to the Big Five list.

1.      Federal Regulatory Relief. The survey system is broken, and the feds need to fix it. The question is whether this administration, which is anti-regulation, will do so. My guess is there won’t be fundamental changes to the system, but there will be improvements on the margins. Surveys for buildings with great survey histories will likely lessen, Civil Money Penalties will continue to decline, but fundamental survey reform is not likely.

2.      Midterm Elections. We can argue about which party is best to run the country, and there is a legitimate debate for either side. What I hope we all can agree to is this: the sector is better off in DC when there is divided government. Our biggest threats and losses have been when one party controls everything. The 2026 midterms are likely to bring divided government back. Republicans are a good bet to hold the Senate, but Democrats are just as likely to take back the House. I have an 80 percent certainty of that, and we will follow it closely on Park Place all the way up to the November elections. 

3.      Immigrations Issues. There are hundreds of thousands, maybe millions of good people around the globe who want to come work in the United States. Many would work in SNFs. Unfortunately, in 2025 it got even harder for them to come here with the announcement of a $100,000 fee for H1-B visas. My hope is that DC gets its act together and figures out a way to get more healthcare workers here. My feeling is that it doesn’t happen in 2026. I do have hope that in the final year of the Trump Administration (2028) he will surprisingly lead the charge for reasonable and comprehensive immigration reform. Sort of like the way only Nixon could normalize relations with China. Trump is the single person who could actually make immigration reform happen. 

4.      Managed Care Changes. 2025 was the first year that both parties really went after the managed care companies. The question in 2026 is whether this is a temporary reprieve or whether DC really holds them accountable. My hunch is that the attacks continue, and marginal improvements occur. SNFs won’t get a payment floor, but DC will continue to pressure managed care companies to approve claims faster and pay providers quicker. 

5.      AI Integration. Are you sick of hearing about AI? Get used to it. AI is going to change everything, and in my opinion, improve lots of things. The question for 2026 and beyond is how we use it to reduce costs and/or improve patient care. My guess is that we continue to see a ton of new products that attempt to do both. Providers that embrace the possibilities will do well. 

Most of these 10 issues are opportunities, rather than risks. There are more good things that can happen in 2026 than bad. Providers in states that prevail on the Medicaid issue are going to crush it. The implication is for you to double- and triple-down your efforts with your state association to defend the great work the sector does every day. If we all do that 2026 can be a very special year.