As Congress considers major Medicaid reforms, New York could face significant funding losses that would affect millions of residents.
House Republicans are reviewing proposals to cut federal Medicaid spending by targeting the program’s “expansion population,” Bill Hammond reported for the Empire Center on May 2, 2025. This group includes non-disabled adults under 65 with incomes up to 138% of the federal poverty level—individuals who gained broader access to Medicaid under the Affordable Care Act (ACA).
While New York already covered many in this category before the ACA, it benefited heavily from the law’s enhanced federal matching rate. The ACA covers 90% of costs for expansion enrollees, compared to a standard 50% rate for other Medicaid participants in wealthier states like New York.
How much federal aid is at stake?
According to Hammond, New York’s Medicaid program covered 2.1 million expansion adults as of June 2024, about 11% of the state’s population—the sixth-highest share among expansion states. In 2023, New York received $15.2 billion in federal aid for these enrollees, ranking second only to California.
If Congress eliminates the enhanced matching rate, New York would lose an estimated 6% of its federal Medicaid funding, based on 2023 data. This translates to about $5.3 billion in lost aid annually, Hammond reported.
In a scenario where a per-enrollee federal funding cap is enacted, the potential losses are even steeper. An analysis by KFF estimated that New York could lose $24 billion in anticipated federal Medicaid aid over the next 10 years. To compensate, the state would need to increase its Medicaid spending by about 5%—at a time when state contributions have already risen 36% over the past three years and are set to rise another 17% under Governor Kathy Hochul’s latest budget proposal.
Broader budget implications
While these policy shifts aim to slow Medicaid’s spending growth, they would not immediately reduce total federal funding. Instead, they would cap future growth rates. House Republicans seek to save $880 billion over a decade from programs under the Energy and Commerce Committee’s oversight, with most savings expected from Medicaid reforms.
The Congressional Budget Office projects Medicaid spending to grow about 4.8% annually through 2034. Reducing the growth rate to 3.1% would achieve the $880 billion target.
For New York, the stakes are clear: major federal funding cuts could force the state to either shoulder a heavier fiscal burden or reevaluate its Medicaid coverage policies.
READ THE FULL ANALYSIS: How Medicaid ‘Expansion’ Changes Could Affect New York by Bill Hammond
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