The New Federalism: What it Means for EMS

“When written in Chinese the word 'crisis' is composed of two characters. One represents danger, and the other represents opportunity. In a crisis, be aware of the danger, but recognize the opportunity.”—John F. Kennedy

In various forums, discussion has focused on a change to a new philosophy in the federal government—an idea called New Federalism. This concept refers to a way of political thinking in the U.S. that seeks to shift power from the federal government back to the states. This is not a new idea, but one that has grown out of response to programs such as the New Deal and Great Society.¹ We are beginning to see this put into effect, but we haven’t begun to experience the full import of these changes.²

The enactment of the One Big Beautiful Bill Act² will result in significant changes to the Medicaid and Medicare funding and reimbursement structure. A potential change in the Affordable Care Act (as of this writing the extension of the ACA is still undecided) could increase the number of uninsured. A review of ground emergency medical transportation (GEMT) cost recovery and intergovernmental transfer (IGT) arrangements will be complete by the end of the year. If the provider tax does not survive scrutiny many states will no longer be able to continue GEMT or IGT funding, meaning these programs, essential to many EMS organizations across the United States, will close as well. This will close a crucial funding source for many agencies operating on the margin.³

How we fund EMS systems in many communities is a delicate balance of the right volume of calls, coupled with a payor mix of Medicare and Medicaid (generally our largest group), third-party insurance patients, workers compensation, motor vehicle collision insurance, violent crime compensation, self-pay, and those who are uninsured and unable to pay.⁴ Any change in our payor mix can be a cause of joy or utter despair.

Claims denials for third-party insurers and Medicare Advantage are increasing.^5-6 If changes in the ACA take place, coupled with a change in eligibility for Medicaid, many EMS systems will be challenged to field enough EMS units to handle requests for care. In some instances, they will close their doors.

EMS is not a business. We need to stop thinking of EMS as a revenue stream and realize that it is a cost center. EMS operates in a setting of inelastic urgent demand, absent consumer choice (when someone dials 9-1-1, we don’t provide a menu of EMS clinicians/providers), and skewed information, violating basic market preconditions. In every community EMS must be accessible regardless of ability to pay. This author has always said we cannot bill our way out of this problem. The societal value of EMS exceeds the private value, innovation markets fail absent public investment equally, and EMS' social returns dwarf what anyone could internalize, bill, and collect on. In EMS there are severe limits on consumer-driven or price-transparent models, and EMS faces these challenges head-on every day.

Options

Regardless of the outcome of the ACA and GEMT, with all the other changes that are occurring regarding insurers, EMS must strategize on how we continue to fund a system of care. The value of EMS lies in availability, readiness, and equitable access. Considering this—and the move to a New Federalism—EMS leaders, city and county administrators, and elected officials need to consider options in how to fund our EMS systems. Some areas worth exploration:

1. General Fund Allocations

This is the primary operating fund of a city, county, or state government. It pays for the basic functions of government that don’t have a dedicated funding source—public safety, parks and recreation, libraries, and community services. The money to fund these operating expenses typically comes from taxes, fees, and intergovernmental transfers. The challenge here is that everyone is trying to apportion their share of the same pot of revenue. Think about it like this: Do we buy new ambulances or renovate our playgrounds? That is the challenge faced by city administrators every day.

2. Enterprise Funds via Utility-Like Rate Structures

Local governments can treat EMS like a municipal utility, using revenues from other utilities (e.g. water or wastewater), setting up their own utility for EMS or setting user fees earmarked to cover EMS services diversifying beyond billing. Sun Prairie Fire and EMS in Wisconsin is a good example of this.⁷

3. Special Districts

Creating EMS-specific or special-purpose districts funded through levies or assessments, often parcel-based, is another proven route. We see this with fire protection districts, but there are models of this in the EMS realm as well—Cambria Community Health District in California and Harris County Emergency Services District 8 in Texas are two excellent examples.^8-10 The capability to set up a special district exists in every state. It provides a great degree of independence for EMS, but to quote Voltaire, “With great power comes great responsibility.”

4. Public Utility Model (PUM)

Here, the government contracts with private EMS providers to deliver services under strict performance-based contracts. The public retains control over assets and oversight, while operations are outsourced for efficiency and accountability. Richmond Ambulance Authority, EMSA in Oklahoma, and Sunstar in Florida are the leading examples of this concept.

5. Local Taxing Authority and Legislative Support

Certain jurisdictions are establishing broader taxing powers dedicated to EMS. For instance, Pennsylvania's Act 54 allows municipalities to increase EMS funding via local taxes, providing a more reliable revenue base.¹¹

Recommendations

We need to be responsible with the people’s money—not only our patients, but the public who may end up supporting us through some type of tax or district-based measure. This author has always said that you cannot have economic efficiency in EMS without technical/clinical efficiency. Take a deep dive into your organization and ask these questions: “Am I operating as efficiently and economically as possible?” “What are the full breadth of resources available to me?” “How can I do this better?”

1. Contracting and Cost-Sharing Arrangements

Municipalities can contract out EMS operations, share services across jurisdictions, or enter cost-sharing agreements to achieve economies of scale and reduce per-service costs. Contracting out vehicle maintenance to other services or creating purchasing agreements where multiple municipalities band to together for purchasing and better contract pricing for medical supplies, pharmaceuticals, and equipment, are all excellent places to start.

2. Billing

Billing will not go away for EMS; it will help defray the cost to the taxpayer for providing the service to the community. We have seen a rise in claims denial by private insurers and Medicare Advantage.^5-6 Your billing contractor has probably spoken with you about improving documentation to improve claims processing and your accounts receivable. How many EMS organizations have spoken directly with the actual insurers? Go directly to Blue Cross. Ask them, “Please tell us what we need to do to be successful in this space.” Their answer may surprise you. If you submit claims for motor vehicles or workers compensation, these are specialties unto themselves. You probably aren’t collecting what you are entitled to recoup. This sub-specialty of EMS billing may require you to leverage an expert in this regard.¹²

3. Low-Interest Loans, Grants, and State Programs

Many states provide funding support capital improvement grants, low-interest loans, matching grants, or training subsidies that can supplement local EMS budgets. Are you taking advantage of that currently?¹³

4. Nonprofit Foundations/Philanthropic Backing

Seattle’s Medic One is a great example here, where communities can establish nonprofit foundations dedicated to EMS support, raising funds for training, equipment, and research through donations.¹⁴ There are others as well, and this type of support goes back to the founding of EMS. The Robert Wood Johnson Foundation in the 1970s funded EMS system development across the United States. The Gary Sinise Foundation and the Duke Endowment Foundation are two more fantastic examples of organizations currently helping EMS organizations.^15-16

5. Communicate Value

We need to communicate our value to the community. The police chief can talk about how his department has reduced crime. The fire chief can speak about how they have reduced fires in the community. Beyond response times, we must be able to clearly communicate to the public, healthcare stakeholders, elected officials, and government administrators how our efforts have reduced hospital length of stay and improved survival and functional outcomes for patients with major trauma, STEMI, CHF, asthma, COPD, pneumonia, and stroke. We need to demonstrate our value, and that we are more than just a ride to the hospital.

The coming shift toward New Federalism is more than a policy evolution, it’s a test of whether local leadership can safeguard EMS as a public good and an essential service in an era of fiscal contraction. Federal retrenchment through reduced Medicaid participation, provider-tax reform, or an altered Affordable Care Act will expose fragile funding systems already stretched by workforce shortages and escalating demand. But within that uncertainty lies the very opportunity John F. Kennedy described: to reimagine EMS financing through enterprise mechanisms, regional cost-sharing, dedicated districts, and public/private partnerships that value readiness, equity, and clinical capacity as essential infrastructure—not expendable expense lines.

EMS finance is, at its core, an exercise in moral accountability. Every dollar represents both a taxpayer’s trust and a patient’s lifeline. The challenge before EMS leaders is to navigate this changing fiscal landscape with innovation and integrity, building systems resilient enough to outlast political cycles and equitable enough to serve all who call for help. In doing so, we affirm that emergency medical services are not a business model to balance, but a covenant to uphold—one that ensures every community, regardless of wealth or geography, retains access to immediate, lifesaving care when it matters most.

References

1. Bromley-Trujillo, R., & Dichio, M. (2025). The state of American federalism 2024–2025: Resisting and reinforcing the rise of the transactional presidency. Publius: The Journal of Federalism, 55(3), 415–444. https://doi.org/10.1093/publius/pjaf023
2. U.S. Congress. (2025). One Big Beautiful Bill Act, H.R. 1, 119th Cong. https://www.congress.gov/bill/119th-congress/house-bill/1
3. Cuello, L. (2025, February 4). Medicaid provider taxes: A critical source of Medicaid funding for states. Center on Budget and Policy Priorities. Retrieved from https://ccf.georgetown.edu/2025/02/04/medicaid-provider-taxes-a-critical-source-of-medicaid-funding-for-states, and Gaffney, A. (2025). Projected effects of proposed cuts in federal Medicaid financing: modelling the elimination of provider taxes. Annals of Internal Medicine. Advance online publication. https://doi.org/10.7326/ANNALS-25-00716
4. National EMS Advisory Council. (2023). EMS system funding and reimbursement: Final advisory. U.S. Department of Transportation, National Highway Traffic Safety Administration, Office of EMS. https://www.ems.gov/assets/NEMSAC_Final_Advisory_EMS_System_Funding_Reimbursement.pdf
5. SVMIC. 2023, March 29. Alarming trend: Sharp increase in commercial insurer claims denials. State Volunteer Mutual Insurance Company. https://www.svmic.com/articles/374/alarming-trend-sharp-increase-in-commercial-insurer-claims-denials
6. Novitas Solutions. https://www.novitas-solutions.com/webcenter/portal/MedicareJH/pagebyid?contentId=00307791
7. City of Sun Prairie, Wisconsin. (2025, July 29). Preliminary Official Statement, $16,910,000 General Obligation Promissory Notes, Series 2025A [PDF]. Ehlers and Associates, Inc. Municipal Advisor. https://www.ehlers-inc.com/ehlersresources/ehlersresources/bondsale/pos/pos343388.pdf
8. Cambria Community Health District, https://www.cambria-healthcare.org/
9. Harris County Emergency Services District 8 https://hcesd8.com/
10. Little Hoover Commission. (2010). Emergency medical services: A system for the 21st century. State of California, Little Hoover Commission. https://lhc.ca.gov/wp-content/uploads/Reports/155/Report155.pdf
11. Firefighters & EMS Fund. (2025, July 30). Pennsylvania fire & EMS tax-authority (Act 54) – Pennsylvania fire & EMS departments could gain critical funding through new tax authority bill. https://www.fireandemsfund.com/pennsylvania-fire-ems-tax-authority-act-54
12. Go SB Solutions. (n.d.). Home page. Retrieved October 28, 2025, from https://www.go-sb.com
13. U.S. Fire Administration. (2023, October). Funding alternatives for emergency medical and fire services (Publication No. FA-360) [PDF]. Federal Emergency Management Agency. https://www.usfa.fema.gov/downloads/pdf/publications/funding-alternatives-for-emergency-medical-and-fire-services.pdf
14. Medic One Foundation. (n.d.). Who we are. Retrieved October 28, 2025, from https://www.mediconefoundation.org/about/who-we-are
15. Gary Sinise Foundation. (n.d.). First responder outreach. Retrieved October 28, 2025, from https://www.garysinisefoundation.org/programs/first-responder-outreach/
16. The Duke Endowment. (n.d.). Health care: Strengthening communities. Retrieved October 28, 2025, from https://dukeendowment.org/our-work/health-care/