After a devastating blow from Washington, New York is taking urgent action to protect health coverage for over a million residents.
On September 10, the New York State Department of Health announced plans to dismantle its expanded Essential Plan following the passage of the federal budget bill H.R.1, which slashes $7.5 billion in annual funding. The cuts will impact 1.7 million low- and middle-income New Yorkers, with 450,000 expected to lose coverage.
In response, Governor Kathy Hochul’s administration is proposing a rollback to the Basic Health Program — a move designed to preserve coverage for 1.3 million people despite the federal pullback.
A forced rollback of health care expansion
The funding loss means New York must terminate its Section 1332 State Innovation Waiver, which had allowed the state to offer comprehensive, zero-premium coverage to working families earning up to 250% of the federal poverty level — about $39,125 per year for an individual.
That waiver, celebrated just last year as a national model for affordable coverage, will now end due to what state officials call a “targeted disinvestment” by federal lawmakers.
“This is a direct result of H.R.1,” said State Health Commissioner Dr. James McDonald. “Even with Governor Hochul’s efforts, nearly half a million New Yorkers will be forced to choose between food and medical bills. That’s unacceptable.”
Who gets hurt?
Among the 450,000 losing coverage are essential workers, small business employees, and families juggling multiple jobs — many of whom do not qualify for Medicaid but struggle with rising health costs.
“These are the people who kept New York running,” said Danielle Holahan, Executive Director of NY State of Health. “They deserve better than being left behind by Washington.”
The ripple effects go beyond patients. The loss of federal dollars will hit hospitals and providers with increased uncompensated care, risking job losses, facility closures, and wider economic damage across the state.
What happens next?
New York is now working with federal officials to reinstate the Basic Health Program, which — while more limited — will keep affordable coverage intact for as many residents as possible.
A 30-day public comment period is now open on the transition plan. Residents can share their feedback through October 10 by visiting: https://info.nystateofhealth.ny.gov/1332
If approved by federal regulators, the Basic Health Program would take effect July 1, 2026. In the meantime, affected New Yorkers will receive 90 days’ notice, access to a special enrollment period, and enhanced customer support to help navigate their options.
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