NYS Expects $3B Budget Gap in 2026 amid White House Medicaid Cuts
Although estimates are preliminary, New York State is “facing a $750 million gap in the current fiscal year and at least $3 billion next year due to federal Medicaid reductions that will go into effect beginning January” as part of the White House’s “One Big Beautiful” spending and tax bill that became law on July 4th. The state’s Essential Plan, which covers low-income New Yorkers who don’t qualify for Medicaid, will incur the first major hit from reductions. There are several other reductions in federal Medicaid funding slated in the coming years that New York is not prepared to replace, having passed a $254 million state budget in May that included major increases to the state’s Medicaid program but did not account for the cuts within the bill that have yet to be assessed by the Congressional Budget Office. In addition, the necessity to facilitate new Medicaid work requirements is expected to cost the state another $500 million in the coming years. Among the roughly 7 million people on Medicaid in New York State, an estimated 1.3 million Medicaid recipients and 730,000 recipients covered by the Essential Plan will become uninsured according to the state Department of Health. Hospitals are similarly facing cuts and expect to incur an estimated $3 billion a year rise in direct costs of treating uninsured patients. In addition, roughly 24 million people currently covered by health plans through the Affordable Care Act (ACA) marketplace, also known as Obamacare, will not only see significantly higher health insurance premiums if ACA insurers secure approvals from state regulators for double-digit rate increases in 2026, but will also see reductions if federal subsidies that help pay for their coverage as enhanced payments passed by Congress in 2021 will lapse at the end of December.
Source: https://www.crainsnewyork.com/health-pulse/medicaid-cuts-punch-hole-new-yorks-budget