By Bill Hammond, Empire Center NY ttps://www.empirecenter.org/publications/how-washingtons-budget-bill-will-affect/
The federal budget bill given final approval by the House of Representatives on Thursday will cost New York billions per year in health-care funds and is expected to reduce enrollment in its government-run health plans by hundreds of thousands.
Yet the impact likely need not be as catastrophic as state leaders and industry officials have portrayed.
New York’s health-care system commands an extraordinarily high level of funding from both the public and private sectors – and therefore is better positioned than most to weather a loss of support from Washington.
In fact, total government funding for New York’s health-care system has risen so rapidly in the new budget that it could forfeit $7 billion and still have more tax dollars to work with than it did in 2025.
Here is a summary of the so-called One Big Beautiful Bill’s major health-care provisions of importance to New York:
Excluding most non-naturalized immigrants from ACA tax credits and the Essential Plan
Fully undocumented immigrants were already excluded from federally funded health programs and subsidies.
The budget bill expands that rule to cover an additional group of legally present but non-naturalized immigrants – such as green-card holders who arrived fewer than five years ago, refugees applying for or granted asylum and people protected under Deferred Action for Childhood Arrivals, or DACA.
Under current law those people are eligible for tax credits under the Affordable Care Act and for enrollment in New York’s Essential Plan, a Medicaid-like program financed through the ACA. Their eligibility is now set to end on Jan. 1, 2027.
The Hochul administration has estimated that this change will cost the Essential Plan $7.6 billion in revenue and displace 730,000 of its 1.7 million enrollees.
Under a 2001 court ruling known as Aliessa v. Novello, the state is obliged to continue providing state-only Medicaid coverage for about 500,000 of those people with incomes below 138 percent of the poverty level. That is expected to cost the $2.7 billion.
This one provision – which technically involves the ACA, not Medicaid – has by far the most significant implications for New York, with a combined effect of lost revenue and increased expenses totaling more than $10 billion. However, the net loss to the health-care industry will be closer to $5 billion.
Notably, the per-person cost of state-only Medicaid coverage is expected to be much lower than under the status quo. This is because the Essential Plan, through a glitch in its funding formula, had been receiving more federal aid than needed to pay its expenses. State officials responded by increasing its reimbursements for hospitals to 225 percent of the normal Medicaid fees.
Immigrant enrollees above the poverty threshold will have few options for alternate coverage. New York has some of the highest commercial insurance costs in the country, making plans prohibitively expensive for lower-income consumers without access to ACA tax credits.
Imposing a work requirement for non-disabled adult recipients
The single biggest money-saving provision of the budget legislation says that non-disabled adults on Medicaid must demonstrate at least 80 hours per month of “community engagement” in order to keep their benefits. This can include paid employment, education programs, community volunteering and other activities.
The Hochul administration has estimated that 1.2 million people – or more than half of its non-disabled adult enrollment – will be pushed out of coverage by this rule. This appears to be an extrapolation based on how previous work requirements have been implemented in Republican-run states. It’s likely that New York could minimize those losses by making its compliance system as user-friendly as allowed by the law.
State officials have not estimated the budgetary impact – but any decline in coverage would result in a savings.
Based on the average cost of coverage for the non-disabled adult population, a 1.2 million decline in enrollment would translate to about $9 billion in Medicaid savings, including $7.6 billion for Washington and $1.4 billion for the state.
New York State recently made Medicaid coverage available for all resident over 65, regardless of their citizenship status.
