Recent actions taken by the Trump administration and the Reconciliation bill approved last week by Congress and signed by the president will significantly alter New York’s healthcare programs and funding. Major impacts associated with the One Big Beautiful Bill Act (OBBBA) are summarized in the Rockefeller Institute’s How Health Policy Changes In Washington Could Affect New York.  The report details the ways in which New Yorkers and New York’s $300 billion healthcare economy stand to be affected by actions taken by the Trump administration and Congress.

As New York’s healthcare sector is inextricably linked with New York’s overall economy and broader employment, which includes the nation’s financial markets, the potential for such changes could have a particularly significant impact on New York’s healthcare sector compared to other states.

The table below illustrates whether the major healthcare proposals under consideration made it into the final bill passed by Congress and signed by the President. Additionally, the table details whether the proposals were modified in the final version, as compared to the initial House-passed version. Proposals that are described in this blog post are linked in the table for direct access to the relevant text.

A Summary of OBBBA Proposals—What Made it in the Enacted Bill?

Provision	In Final Bill	Bill Status
Medicaid
Noncitizens
Federal Match Penalty For Providing Noncitizen Coverage	No	In initial House bill; dropped from final version
Potential Cost to Cover Aliessa Population	No	Not in either bill; potential state impact from EP action
Revise Definition of Qualified Immigrants	Yes	Not in House bill; included in final bill
Reduce Federal Match for Noncitizen Emergency Medicaid	Yes	Not in House bill; included in final bill
Deferred Action Childhood Arrival Essential Plan (EP) Coverage Elimination	No	In House bill; dropped from final version; accomplished administratively
Provider Rates
Restrict Provider Payments (Directed Payment Templates)	Yes	Final bill modifies initial House version
Provider Taxes
Managed Care Organization (MCO) Tax Elimination	Yes	Same in both houses
Provider Tax Freeze	Yes	Same in both houses
Provider Tax Phase-out	Yes	Not in House bill; included in final bill
Coverage
Community Engagement and Work Requirements	Yes	Final bill modifies initial House version
Bi-annual Eligibility Determinations	Yes	Final bill modifies initial House version
Reduce Duplicate Enrollment Process Establishment	Yes	Same in both houses
Limit Retroactive Coverage	Yes	Final bill modifies initial House version
Reduce Duplicate Enrollment Data Sharing	Yes	Same in both houses
Delay Medicaid Streamlining Rule	Yes	Final bill modifies initial House version
Delay Medicare Savings Plan Rule	Yes	Final bill modifies initial House version
Require Premiums and Cost Sharing	Yes	Same in both houses
NH and LTC Home Equity Limit	Yes	Same in both houses
Limit Reasonable Opportunity Periods	No	In initial House bill; dropped from final version
Limit Funding to Planned Parenthood	Yes	Final bill modifies initial House version
Ban Gender Affirming Care	No	In initial House bill; dropped from final version
Administrative/ Other
Implementation Funding	Yes	Final bill modifies initial House version
Delay NH Minimum Staffing Rule	Yes	Final bill modifies initial House version
Limit Medicaid Waiver Flexibility	Yes	Final bill modifies initial House version
Home and Community Based Services Waiver Flexibility	Yes	Not in House bill; included in final bill
Rural Hospital Transformation Grants	Yes	Not in House bill; included in final bill
Pharmacy Reforms	No	In initial House bill; dropped from final version
Disproportionate Share Hospital Payments Reduction Delay	No	In initial House bill; dropped from final version
Error Rate Penalty	Yes	Final bill modifies initial House version
Essential Plan (EP)
Enhanced Subsidy Expiration	No	Current law; not in any reconciliation bills
Prohibition on Gender Affirming Care/Abortions	No	In initial House bill; dropped from final version
Loss of Funding for Legally Residing Noncitizens (i.e. Aliessa)	Yes	Same in both houses
Marketplace
Pre Enrollment Verifications	Yes	Same in both houses
Plan Type Flexibility (i.e. High Deductible)	Yes	Same in both houses
Prohibit Medicaid-Eligible but non Enrolled from Tax Credit Eligibility	Yes	Same in both houses
Special Enrollment Limitations	Yes	Same in both houses
Pre Enrollment Verifications	Yes	Final bill modifies initial House version
Recapture of Excess Credits	Yes	Same in both houses
Open Enrollment Limitations	No	In House bill; dropped from final version; accomplished administratively
Actuarial Value Limits	No	In House bill; dropped from final version; accomplished administratively
Employer Coverage Arrangements (i.e., CHOICE)	No	In initial House bill; dropped from final version
Various Reconciliation & Enrollment Provisions	No	In House bill; dropped from final version; accomplished administratively
Special Enrollment Limitations	No	In House bill; dropped from final version; accomplished administratively
Medicare
Medicare – Restrict Noncitizen Coverage	Yes	Final bill modifies initial House version
Physician Fee Schedule 2.5% Increase	Yes	Final bill modifies initial House version
Orphan Drugs	Yes	Same in both houses
Pharmacy Benefit Manager Reform	No	In initial House bill; dropped from final version
Allow Certain Closed Hospitals to Reopen as a Rural Emergency Hospital	No	In initial House bill; dropped from final version
Using Artificial Intelligence to Identify Improper Medicare Payments	No	In House bill; dropped from final version; accomplished administratively
Health Savings Accounts	No	In initial House bill; dropped from final version
Delay Medicare Savings Plan Rule	Yes	Final bill modifies initial House version

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The OBBBA will reduce funding to New York. Most of the cuts in previous versions are maintained, with minor changes:

Medicaid Eligibility

The OBBBA requires minimum work, school, or community engagement standards averaging 80 hours monthly for able-bodied adults ages 19–64. It introduces monthly premium contributions and selected point-of-service co-pays for laboratory services or doctor visits, not to exceed 5 percent of income. It also requires biannual, rather than annual, eligibility checks for childless adults. Coverage was modified to decrease the amount of time someone might qualify for retroactive coverage from 90 days to 60 days for certain populations, such as disabled adults and seniors, and down to one month for others. Also included in the OBBBA are delays in the implementation of the Medicaid Streamlining Eligibility, Medicare Savings Plan, and nursing home staffing rules until 2034. The bill further prohibits the Health and Human Services Secretary from implementing or enforcing components of such rules. The prohibition on enforcement language allows for a backdoor limitation on reasonable opportunity periods, which was dropped as a discrete provision in the bill. Finally, the bill caps the maximum home equity limit at $1 million, not indexed to inflation, for nursing home and home and community-based care.

As noted in the report, the state and federal government will realize savings concurrently related to these proposals, which in combination are estimated to reduce Medicaid program enrollment in New York by 1.5 million over a multiyear period corresponding to the effective date of each action.¹ The Congressional Budget Office assumes a portion of Medicaid eligibility reductions will be eligible for other forms of coverage.² Currently, New York State has a 95 percent uninsured rate.³

Managed Care Organization (MCO) Tax

The OBBBA would restrict the use of managed care taxes and other taxes that require a broad-based and uniform waiver, effective immediately, but subject to a transition period, as determined by the Secretary of Health and Human Services, not to exceed three years. However, when the statute is read in combination with a proposed rule submitted by the Centers for Medicare and Medicaid Services (CMS) on May 15th, which states that “If this rule is finalized, States that received the most recent waiver approval for their tax that does not comply with § 68 (e)(3) 2 years or less from the effective date of the final rule would not be eligible for a transition period.” Accordingly, states, like New York, with approval for such a tax within the past two years, would not be subject to a transition period, assuming the proposed rule is finalized following the comment period, which ends on July 14, 2025. New York’s managed care tax, which took effect January 1, 2025, was estimated by the state at $3.7 billion over two years.⁴ According to the 2026 Enacted Budget Financial Plan, “The FY 2026 Enacted Budget reflects the use of the funds over three years to support $1 billion in existing Global Cap commitments [$500 million in state fiscal year 2026 and $500 million in state fiscal year 2027] and the remaining $2.7 billion for new health care delivery investments [such as additional funding for the Safety Net Transformation program and provider rate increases]. These investments and funding are dependent on successful execution of the assessment, which is subject to continued Federal support.” Given the potential for a lack of transition period, it’s likely that at least a year, but more than likely more than of a year of MCO tax revenue is at risk in New York, making this the largest immediate reduction in federal Medicaid funding, without commensurate state savings, to support New York’s existing programs.

Provider Taxes

Further, and also effective immediately, all new provider taxes would be prohibited under the enacted bill, freezing approved New York State provider taxes at existing levels until October 2028. Then, the bill further restricts the use of existing provider taxes by reducing the allowable current threshold of 6 percent by 0.5 percentage points annually, beginning in 2028, until reaching 3.5 percent in 2031. While the final bill excludes nursing home and intermediate care facility taxes, according to a Kaiser Family Foundation survey of states, New York’s hospital taxes fall between 4.01 percent and 5.0 percent, at least half a percent above the ultimate threshold allowed in the enacted bill. This estimate includes hospital surcharges,⁵ which are authorized under the Health Care Reform Act. New York has special federal legislation⁶ allowing it an exception to typical federal requirements, which necessitate that such taxes be broad-based and uniform.⁷ This exception allows a surcharge, generating over $5 billion annually at existing levels, on certain hospital and clinic services.

Assuming the surcharges could be impacted by the new thresholds, which begin to take effect in October 2028, the earliest such thresholds could trigger impacts to existing provider taxes in New York would be in federal fiscal year 2030 or 2031. This timeline would translate, at the earliest, to state fiscal year 2031, which is outside the five-year financial plan period for the upcoming state fiscal year 2027 budget negotiations. Importantly, however, the special exception could also trump the new language, as it includes a “notwithstanding inconsistent provision of law” qualifier, which could suggest the new thresholds are inapplicable to New York’s surcharges or give the state room to challenge the future implementation of the threshold relative to surcharges in New York. This is an important and complex issue, given the level of reliance on surcharges to fund New York’s healthcare system, but given the potential for impact is at least five fiscal years into the future, it will not have an immediate impact on New Yorkers or the New York healthcare economy.

Distressed Hospital Funding

The bill directs the Health and Human Services (HHS) Secretary to draft regulations that limit Directed Payment Template (DPT) funding to distressed hospitals to Medicare rates rather than commercial rates for rate periods beginning on or after the date of enactment of the bill (July 4, 2025). This could be read to imply that the limit on DPT payments does not apply to rate periods beginning April 1, 2025, as would be the case in New York, providing New York with a one-year grace period on its existing rate structure, which is significantly above Medicare, particularly for distressed hospitals. Under this scenario, we previously estimated that up to one-third or $500–$600 million of federal DPT support would be at risk, creating a near-term reduction in federal support for distressed hospitals. While the final bill includes a grandfathering scenario, during which payments that exceed Medicare reimbursement would phase-out rates by 10 percent annually beginning January 2028, grandfathered payments are limited to those approved (or submitted) by May 1, 2025 for all providers, except rural hospitals, which are upon enactment (or July 4, 2025). The New York State budget had not yet passed by May 1st. Therefore, under the grandfathering scenario, if New York’s distressed hospital DPT payments are included, the payments would be frozen at 2025 budget levels, or $1.855 billion. This would not accommodate changing circumstances at the more than 70 hospitals currently receiving DPT funding and would not allow for federal funding for any newly distressed hospitals as a result of federal reductions. In either scenario, federal support for the 70 distressed hospitals in New York will be significantly reduced by the bill. Additionally, the future availability of $500 million in federal funding for distressed hospitals through the Advancing All-Payer Health Equity Approaches and Development (AHEAD) program could be at risk, given prospective limitations proposed on 1115 waivers. Existing programs, such as the Safety Net Transformation program, will be increasingly important in navigating the impact of such funding reductions for providers and residents. This program may be leveraged in combination with a new rural health transformation program described below.

Marketplace Subsidies for Noncitizens

The Affordable Care Act made certain legally residing noncitizens eligible for federally funded subsidies to purchase qualified health insurance on exchanges or as a pass-through to a state-administered Basic Health Program, known as the Essential Plan in New York. The bill eliminates such Advance Premium Tax Credits (APTC) and subsidies for most legally residing noncitizens, many of whom are known as the Aliessa There are currently approximately 500,000 noncitizens enrolled in the Essential Plan that would no longer qualify for federal subsidies. While estimates on the lost revenue have varied and are higher than the cost due to the funding structure, eliminating these subsidies could cost the state $3 billion in state funds to provide equivalent healthcare, effective January 2026; however, the circumstances surrounding previous litigation may have been materially altered by the bill. Interestingly, the final version of the bill did not include a provision, which was included in prior iterations, that would have made such persons ineligible for the Basic Health Program.

1115 Waivers

The bill directs HHS to restrict the obtainability of federal funds available to support Medicaid waiver initiatives, unless such waivers do not result in an increase in federal spending than would have otherwise occurred in the absence of the waiver, effective January 1, 2027, for new waivers, amendments to waivers, and waiver renewals. The initial versions of the bill were subject to the determination of the Secretary, but the final bill changed the requirement to as determined by the CMS Actuary. The statutory budget neutrality language included in the bill invalidates 2024 guidance expanding access to federal funds for all Medicaid 1115 Research and Demonstration waivers, including New York’s Health Equity Reform (NYHER) 1115 waiver. This action is estimated to cause greater scrutiny of the state’s Medicaid matching dollars used to draw down approximately $6 billion in federal funding and could impact New York’s ability to amend its existing waiver or the availability of the full $6 billion should amendments be necessary. For example, the previously mentioned statutory eligibility changes in the bill modify eligibility standards, effective January 2027, including but not limited to continuous coverage for childless adults, which are requirements in New York’s waiver. The required changes in the bill, therefore, raise questions about whether the terms of the waiver or any other amendments New York would like to pursue for the foreseeable future would need to be amended or renegotiated with the Trump administration before it is set to expire on March 31, 2027. The waiver also includes maintenance of effort provisions restricting New York’s ability to modify funding for certain programs in the face of federal reductions.

It is also important to note that the limits on the budget neutrality test included in the bill are in addition to recent CMS guidance limiting the availability of designated state health programs (DSHPs) and rescinding prior CMS guidance on health-related social needs (HRSNs). Both of these administrative changes modify the terms under which New York’s Health Equity Reform waiver approval was granted, as described in more detail in How Health Policy Changes In Washington Could Affect New York.

Abortion Funding

The OBBBA bans Medicaid funding for abortion providers receiving $800,000 or more in Medicaid funds. The House limit was $1 million. In June, Governor Hochul announced $25 million in new abortion access grants to mitigate provider impacts and preserve access. Notably, the restriction on the use of cost-sharing reduction payments in the marketplace was not included in the final bill. New York is one of four states that require plans to cover abortion services in the marketplace. ⁸

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The final Reconciliation bill added the following new proposals:

Definition of Immigrant for Medicaid and Child Health Plus (CHP)

The bill revises the definition of qualified immigrant in Medicaid and Child Health Plus to exclude refugees, asylees, parolees, persons in temporary protected status, and other previously recognized categories; pregnant women and children are exempt. This is an analogous Medicaid and CHP provision to a Medicare eligibility definition included in the initial House-passed bill and included in the final OBBBA. Under the Medicare provision, Medicare eligibility is terminated (no later than 18 months from enactment (or January 2027)) for refugees, asylees, and those with temporary protected status.

Reduce Federal Funding for Noncitizen Emergency Care

Prohibits enhanced federal funds from being applied, where applicable (adults 0-138 percent of the federal poverty limit in New York State), for noncitizen emergency care, which is provided in life-threatening or organ-threatening situations. This provision was traded as a result of the Senate parliamentarian disqualifying the enhanced Federal Medical Assistance Percentage (FMAP) penalty for providing noncitizen coverage included in the House bill. According to an Empire Center report relying on data obtained through a freedom of information law request, as of March 2024, there are 480,000 nonqualified or undocumented immigrants enrolled in emergency Medicaid, compared to 20,000 in 2014. The report further details that essentially 100 percent of enrollment is concentrated in New York City (74 percent), Long Island (14 percent), and the Mid-Hudson region (12 percent). Additionally, the report indicates that spending on emergency care for noncitizens totaled $639 million in state fiscal year 2024. Given that New York provides comprehensive healthcare coverage to undocumented children, pregnant women, and seniors, one can assume the spending on this program is largely related to childless adults, eligible for enhanced FMAP. Under that scenario, the federal government would have paid about $575 million of the $639 million in total spending. Under the bill’s provision, the federal government’s share would drop to approximately $319 million, potentially reducing funding to New York by approximately $256 million annually.

Home and Community Benefit Waivers

The bill allows the Secretary to approve 1915(c) waivers for home and community-based care for persons who do not require a nursing home level of care, which is the current standard. Such waivers allow for enrollment caps, functional eligibility criteria, and defined service benefits. New York State currently uses 1115 waiver authority for the bulk of its home and community-based long-term care programs.

Rural Hospital Transformation Fund

$50 billion in funding is made available to support the transformation and integration of rural hospitals, clinics, federally qualified health centers, and community mental health centers. $10 billion is allocated in each of the five federal fiscal years beginning October 2026 and ending in federal fiscal year 2030. Fifty percent of the total funding will be distributed to all states that apply, so at a minimum, each state could receive $500 million; however, it’s possible not all states would apply. The remaining 50 percent would be distributed at the discretion of the Secretary of Health and Human Services using criteria based on the proportion of rural providers, the situation of hospitals in the state, and other factors as determined by the Secretary. As New York represents 10 percent of Medicaid expenditures, New York State could potentially be eligible for up to $5.0 billion in total funding (over five years), which could be combined with Safety Net Transformation Program funds to mitigate impacts to affected providers. New York has 20 critical access hospitals, 1 rural emergency hospital, 55 rural health clinics, and 119 federally qualified health centers.⁹

Implementation Funding

The final bill adds implementation funding for the provider tax phase-out ($20 million nationally; up to $2 million for New York); biannual eligibility checks ($75 million nationally; up to $7.5 million for New York); revising the definition of qualified immigrants ($15 million nationally; up to $1.5 million for New York); limiting 1115 waiver flexibility ($5 million in 2026 and $5 million in 2027; up to 1 million for New York); and home and community-based waiver flexibility ($50 million nationally in 2026 and $100 million in 2027; up to 15 million for New York). New York estimates assume a 10 percent distribution from national totals, consistent with New York Medicaid spending as a proportion of national expenditures.

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The final bill dropped the following House proposals, but alternatives or administrative approaches were included:

FMAP Penalty

A 10 percent penalty on expansion FMAP (currently at 90 percent) for any state, such as New York, that provides state-funded healthcare for noncitizens (specifically nonqualified aliens, with the exception of pregnant women and children), effective October 2027, was not included. New York is one of seven states that provide coverage to such adult noncitizens. The provision, which could have reduced funding to New York by up to $1.6 billion, was dropped following a determination by the Senate parliamentarian that the provision was ineligible for inclusion in a Reconciliation bill; however, it was replaced by alternative proposals to reduce federal funding for noncitizen emergency care and an amendment to the definition of qualified alien for the purposes of public health insurance program eligibility.

Limits on Reasonable Opportunity Periods

Language was not included that would prohibit the use of extensions for reasonable opportunity periods, which allows applicants for Medicaid, Child Health Plus, the Essential Plan, and those purchasing coverage on the Exchange with subsidies 90 days to verify his or her citizenship. Current regulations provide for “good faith extensions” as follows: The agency may extend the reasonable opportunity period beyond 90 days for individuals declaring to be in a satisfactory immigration status if the agency determines that the individual is making a good faith effort to obtain any necessary documentation or the agency needs more time to verify the individual’s status through other available electronic data sources or to assist the individual in obtaining documents needed to verify his or her status. The 2024 Biden-era rule, “Medicaid Program; Streamlining the Medicaid, Children’s Health Insurance Program and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes,” removed the optional limitation on the number of reasonable opportunity periods, if the state “demonstrates that the lack of limits jeopardizes program integrity.” As the Secretary is prohibited from implementing or enforcing the rule in the approved Reconciliation bill, the expansion of reasonable opportunity periods under the Biden administration was reversed, despite there not being an outright ban on extensions.

Marketplace Coverage

Many of the House Marketplace coverage provisions codifying a March 2025 proposed rule that was subsequently finalized on June 20th were not included in the final bill.¹⁰ The rule is effective in January 2026, meaning the provisions will impact consumers in the upcoming open enrollment period. These provisions in the finalized rule include, but are not limited to, shortening the open enrollment period, limiting opportunities for special enrollment periods, removing deferred action for childhood arrivals (DACA) persons from the definition of lawfully present for the purposes of Basic Health Program (or Essential Plan in New York) eligibility, and strengthening income and redetermination procedures. Despite these provisions being dropped from the OBBA, they are still modifications to prior policy, which impact coverage for New Yorkers. New York State of Health and the Department of Financial Services, in their comments on the proposed rule estimated the rule “will raise premium costs by 4.5% (more than $300 per month for a typical family), and result in up to 6,000 fewer enrollees in Qualified Health Plans, on top of the more than 50,000 enrollees we expect to lose if Congress and the President choose not to extend the enhanced Premium Tax Credits under the Inflation Reduction Act that are expected to expire at the end of 2025.” The comments do not address the potential cost to the state to provide state-only coverage associated with the DACA change, which was previously estimated at around $80 million annually.

Additionally, as was the case with the House and Senate versions, the final OBBBA did not include an extension of the enhanced marketplace subsidies authorized during COVID-19 that expire at the end of December 2025. The impending expiration this year creates a potential “subsidy cliff” by producing a sudden and steep increase in premiums for those purchasing coverage in the individual or small group market. The subsidy benefits nearly 140,000 New Yorkers and reduces coverage costs by $1,453 per person annually. In 2022, the last time the subsidies were set to expire, New York State estimated that the expiration would increase premium costs for qualified health plan enrollees by 58 percent and reduce funding to the Essential Plan by $600–$700 million. New York recently estimated the impact at 38 percent following passage of the House bill, which did not include the extension. Using January 2025 enrollment data, that estimate would jump from $1 billion to $1.2 billion.¹¹ When combined, as if separate actions, with the loss of eligibility for certain legally residing noncitizens, the state estimates the lost revenue impact could be as high as $7.5 billion.

Gender-Affirming Care

After expanding the ban on gender-affirming care from children to all persons as part of negotiations in the House (detailed in the paper), the Senate parliamentarian required the ban to be dropped from the final version. While language was not included, the Trump administration has taken numerous steps to limit the provision of such care. Already, the Trump administration has made clear through executive orders that it intends to challenge states and providers that use federal funds in conflict with the administration’s policies regarding gender. On March 5, 2025, CMS issued a letter to hospitals to provide “notice that CMS may begin taking steps in the future to align policy, including CMS-regulated provider requirements and agreements” with the priorities and perspectives espoused under the EO. Additionally, the Centers for Medicaid and Medicare Services (CMS) sent a letter to Medicaid directors in April, which, according to a statement by CMS administrator, Dr. Mehmet Oz, informs states that: “Medicaid dollars are not to be used for gender reassignment surgeries or hormone treatments in minors.”¹² In May, the Department of Health and Human Services followed up on the guidance with a report on the treatment for pediatric gender dysphoria. Additionally, the June marketplace rule, described above, limits gender-affirming care for marketplace coverage.

Pharmaceutical Cost Controls

Despite the Speaker’s immense interest in the topic, and that pharmacy spending is a contributor to spending growth (as detailed in the report), the final bill does not include a federal ban on spread pricing (the difference between the acquisition cost and the drug cost) in Medicaid or other pharmaceutical-related provisions in Medicaid. As noted in the report, New York has long tried to limit the gaming of pharmaceutical pricing by eliminating spread pricing in the Medicaid program in 2019 and recently issued regulations on commercial PBMs through the Department of Financial Services.

Disproportionate Share Hospital (DSH) Program

Scheduled reductions to DSH funding, that absent a change to New York State law, would primarily affect the availability of DSH funding for New York City,¹³ were delayed from starting in October 2026 to 2028 in the initial House Reconciliation bill, but not included in the OBBBA. Accordingly, at present, DSH cuts, enacted in the Affordable Care Act but not yet implemented, are scheduled to go into effect in October 2026. The DSH reduction has been delayed by Congress more than a dozen times since enactment through the ACA. However, under current law, the availability of $2.4 billion federal DSH funding to New York, or 15 percent of federal funding for DSH ($16 billion), would be reduced beginning in state fiscal year 2027. DSH funding is matched by the state or locality (through an intergovernmental transfer), making New York’s total DSH program over $4.7 billion as of federal fiscal year 2025. The Medicaid and CHIP Payment and Access Commission (MACPAC) estimates New York State’s DSH allotment would be reduced by $2.8 billion, which translates to a loss of $1.4 billion in federal DSH funding (or a nearly 59 percent reduction).¹⁴

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Accordingly, as a result of the OBBBA, actions taken by the Trump administration, and impending impacts yet to be implemented, federal funding to New York could be reduced by 10 percent or more, with impacts growing in the out years.¹⁵

Congress and the Trump administration are changing course with Medicaid funding in a way that limits future executive discretion and regulatory authority to increase spending. It’s likely that litigation and implementation delays will cause the changes to occur over time, rather than as scheduled, but the Trump administration is likely to take further actions following enactment of the bill. Additionally, Congress is poised to adopt rescission bills later this month, which could further reduce funding to New York. If control of Congress flips in the midterms, Congress could reverse certain actions; however, at least in the short term, the Trump administration could veto such changes, necessitating a two-thirds vote. Therefore, it is unlikely to expect substantial relief from the enacted healthcare reductions in the near term.

Like other governors, Governor Hochul has already been clear that New York is not poised to sustain the level of funding reductions enacted by Congress by saying, “no one State can backfill these massive cuts.” It’s clear the Congressional healthcare package will necessitate substantial changes to the state’s financing of healthcare through conversations between the governor, the legislature, and stakeholders on program design and funding to balance the state’s financial obligations with the need to mitigate impacts to citizens and providers. The Rockefeller Institute will continue to study and monitor these developments closely as they unfold and to provide relevant and timely analysis.

The timeline below illustrates the phased implementation of the major components of the OBBBA and certain related provisions. For example, this includes actions that are being implemented administratively or are in current law that were included in prior iterations of the bill or are related to provisions in the bill. It’s important to consider that the impacts of these actions will build over time, becoming more and more impactful to both coverage and financing in future years. As a result, these changes will shape healthcare in New York and the nation for years to come, rather than all at once.

For additional details on the programs described in this article, see the Rockefeller Institute’s How Health Policy Changes In Washington Could Affect New York.

Timeline of Selected Upcoming Statutory and Administrative Healthcare Changes Related to the One Big Beautiful Bill Act

SFY = New York State Fiscal Year
FFY = Federal Fiscal Year

ABOUT THE AUTHOR

Jillian Kirby Bronner is a special advisor to the New York State Budget Director and a guest author at the Rockefeller Institute of Government.

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[1] For example, the delay of rules is effective immediately. The work requirement provision is effective no later than January 2027 and the premium and cost sharing requirements are effective January 2028.

[2] See, for example, Congressional Budget Office letter dated June 24, 2025.

[3] According to the Kaiser Family Foundation.

[4] Per the 2026 Enacted Budget Financial Plan.

[5] 7.04 percent for Medicaid payors and 9.63 percent for all others, except self-pay.

[6] “(c) WAIVER OF CERTAIN PROVIDER TAX PROVISIONS.—Notwithstanding any other provision of law, taxes, fees, or assessments, as defined in section 1903(w)(3)(A) of the Social Security Act (42 U.S.C. 1396b(w)(3)(A)), that were collected by the State of New York from a health care provider before June 1, 1997, and for which a waiver of the provisions of subparagraph (B) or (C) of section 1903(w)(3) of such Act has been applied for, or that would, but for this subsection require that such a waiver be applied for, in accordance with subparagraph (E) of such section, and, (if so applied for) upon which action by the Secretary of Health and Human Services (including any judicial review of any such proceeding) has not been completed as of July 23, 1997, are deemed to be permissible health care related taxes and in compliance with the requirements of subparagraphs (B) and (C) of section 1903(w)(3) of such Act.”

[7] This special exception as enacted as part of the Balanced Budget Act of 1997, vetoed by then President Clinton, and subsequently restored in Clinton v. City of New York, 524 U.S. 417 (1998).

[8] Coverage for Abortion Services in Medicaid, Marketplace Plans and Private Plans, 2019.

[9] According to the Rural Health Information Hub.

[10] For additional information and analysis: https://www.healthaffairs.org/content/forefront/hhsfinalizes-aca-marketplace-rule-part-1-enrollment-restrictions-premiums-actuarial.

[11] EP enrollment as of January is 1,652,160. Approximately 30 percent of the estimate for the subsidy expiration overlaps with the estimates for prohibiting certain noncitizens from eligibility for federal funding in the Essential Plan.

[12] CMS Administrator Mehmet Oz’s statement on the letter to state Medicaid agencies.

[13] The Citizen’s Budget Commission’s 2018 blog post on “DSH Cut Delayed” provides details regarding the hierarchy of New York State DSH payments and the impact of the scheduled reductions.

[14] For more information see MACPAC’s 2024 Annual Analysis of Medicaid Disproportionate Share Hospital Allotments to States.

[15] Allocating CBO’s Estimates of Federal Medicaid Spending Reductions Across the States: Senate Reconciliation Bill.