House Bill Guts $ Billions in Funding for New York’s Health Care System in Just a Few Months

National attention on “The Big Beautiful Bill” passed by the House of Representatives on May 22, 2025 focused on tax cuts for the rich, Medicaid cuts driving millions of Americans off their health insurance, and bigger deficits. There is still a long way to go before the bill passes the Senate and is then jointly negotiated as a final product, which could even be worse than the House bill, before being sent to the President

In New York, however, the Big Beautiful Bill, if it becomes law, would have an outsize impact almost right away, gutting billions of dollars of funding for New York health care in just six months.

The bill devastates the New York Essential Plan, providing health insurance and covering health care costs for 1.6 million New Yorkers. The Essential Plan is 100% funded by the Federal government under an option taken by New York in 2016 to allow residents who would not be eligible for Medicaid, but would be eligible for the Affordable Care Act, to use Federal funds for persons who would have qualified for  “Obamacare” to pay for health care coverage for those 1.6 million New Yorkers .

Effective January 1^st, 2026, funding for lawfully present immigrants in New York, estimated to be about 730,000 of the 1.6 million persons, a total of about $7.5 billion in New York’s current budget, is eliminated by the House bill.

Governor Hochul denounced the bill in a press release, saying,

 “The provisions as currently written will lead to substantial changes in how the critical public insurance programs Medicaid and the Essential Plan are funded and administered across the state. According to the text of the bill language as passed by Ways & Means, more than half (50%) of Essential Plan funding — more than $7.5 billion — would be slashed, threatening the future of the program, and causing hundreds of thousands of New Yorkers to lose coverage. That same Ways & Means text would shift almost $3 billion of costs to the State, and result in billions of dollars in cuts to the State’s healthcare providers.”

Although the funding covers lawfully present immigrants, the money goes to providers of care, hospitals, clinics, nursing homes, and doctors and their employees. The loss of the money affects the budgets of all health care providers.

Who are lawfully present immigrants? They are the following:

The term “qualified non-citizen” includes:

• Lawful Permanent Residents (LPR/Green Card Holder) in country < 5 yrs.
• Asylees
• Refugees
• Cuban/Haitian entrants
• Paroled into the U.S. for at least one year
• Conditional entrant granted before 1980
• Battered non-citizens, spouses, children, or parents
• Victims of trafficking and his or her spouse, child, sibling, parent or individuals with a pending application for a victim of trafficking visa
• Granted withholding of deportation
• Member of a federally recognized Indian tribe or American Indian born in Canada
• Citizens of the Marshall Islands, Micronesia, and Palau who are living in one of the U.S. states or territories (referred to as Compact of Free Association or COFA migrants)

Lawfully present immigrants also include persons in the United States under color of law, called PRUCOL, meaning they have a documented status, such as granted DACA status, have applied for asylum or who have on order withholding deportation, or have applied for a lawful status in the United States.

Governor Hochul’s reference in the press release regarding cost shifts to New York refers to a 2001 New York Court of Appeals (the State’s highest court) decision, Aliessa v. Novello, which said New York could not deny Medicaid to lawfully present immigrants. When the Essential Plan came into being, New York moved those immigrants covered by New York Medicaid to the Essential Plan. With funding for immigrants now potentially wiped out by the House Bill, New York will once again be required to fully fund health care costs for about 500,000 of the 730,000 immigrants whose funding is lost under the House bill at a cost of $2.7 billion.

The House bill also penalizes New York and some other states for covering some undocumented immigrants from its own funds. The Affordable Care Act expansion reimbursement is cut back from 90% to 80% for states that provide this coverage , effective in 2027. The Empire Center for Public Policy estimated this provision of the House bill would cost New York between $1 and $2 billion.

The Food Stamp cuts in the House bill amount to nearly $300 billion nationally over 10 years and include compelling states to share anywhere from 5 to 25% of the costs of the program in that state, impose work requirements on adults age 55-64 (19-54 were added in 2023) and eliminate some lawful immigrants from the program, according to the Center on Budget and Policy Priorities.

The five-percent share of costs of Food Stamps is compulsory for every State and would cost New York $366 million a year, but the House bill adds cost-sharing penalties based on each State’s combined error rates. The penalty adds the State’s over-payment and under-payment percentages into one combined error rate. According to the Center for Budget and Policy Priorities, the average error rate across the nation is over 11%, and New York’s latest 2023 rate was 12%, which would result in a $1.8 billion cost sharing requirement for New York in 2028. The bill also increases every State’s share of the administrative costs of the program from 50% to 75% of total cost.

The Congressional Budget Office, in a letter sent to Democratic leaders on June 4, 2025, said its analysis of the Big Beautiful Bill indicated about 16 million people would lose health insurance by 2034. The bill includes not just major impacts on Medicaid but also the Affordable Care Act. The deadline for imposing work requirements for Medicaid for single “able-bodied” adults age 19 to 64 is December 31, 2026 in the House bill, although states can move faster if they wish.

In New York, the initial de-funding is focused on immigrants, but as I said, the loss of funds affects everyone. Work requirements for hundreds of thousands of single adults will drive many marginalized citizens off the Medicaid and Food Stamp rolls on top of potentially cutting hundreds of thousands of immigrants off their health insurance, pushing sick people to emergency rooms and away from primary care.

My next article will focus on the new Medicaid (and Food Stamp) work requirements in the House bill, and other Medicaid and Affordable Care Act cuts. As bad as they are, conservative Republican Senators, buttressed by Elon Musk’s denunciation of the House bill for increasing the deficit, are eyeing further opportunities to cut the budget. The Senate leadership is still claiming their goal is to finish by July 4.