New York State officials have announced new measures to maintain health care access for residents after the passage of federal budget bill H.R.1, which significantly reduces funding for the state’s Essential Plan. The legislation, passed by Republicans in Congress, eliminates $7.5 billion in annual federal support for the program that covers nearly 1.7 million low- and middle-income New Yorkers.
In response to these cuts, Governor Hochul is proposing to end the Section 1332 State Innovation Waiver and revert to a Basic Health Program model. This move is intended to allow about 1.3 million people to remain insured through the state’s health coverage programs, despite reduced federal support.
“I have been very direct and clear with New Yorkers about the disastrous impact of H.R.1 on our health care system, and the devastating choices it would force states to make,” said State Health Commissioner Dr. James McDonald. “By reverting to a Basic Health Program, Governor Hochul is making sure that 1.3 million working people will be able to keep their affordable health insurance. Even with these steps, too many New Yorkers – nearly half a million– will lose affordable health coverage and be forced to choose between keeping food on the table and paying their medical bills. I am grateful to Governor Hochul for standing up and doing what’s right while Washington Republicans rip health care away from their constituents.”
State officials estimate that approximately 450,000 middle-class residents will lose access to zero-premium comprehensive insurance as a result of these changes.
The loss of federal funds is expected to increase uncompensated care costs for providers across New York, potentially affecting healthcare delivery statewide and threatening facility closures in some communities. Economic impacts are also anticipated due to decreased healthcare spending in local economies.
Previously, New York expanded its Essential Plan under a Section 1332 waiver—hailed as an innovative approach—to cover individuals earning up to 250% of the federal poverty level (about $39,125 annually for one person), providing comprehensive insurance with no premiums or deductibles.
NY State of Health Executive Director Danielle Holahan commented: “The Essential Plan has been the linchpin to driving down New York’s uninsured rate among those who do not qualify for Medicaid but still struggle with health care costs. Many enrollees are essential workers, small business employees, and families working multiple jobs to make ends meet. Our decision to terminate the waiver allows us to preserve coverage for as many New Yorkers as possible and protect more than a decade of progress in expanding healthcare.”
As part of this transition process, state agencies plan an orderly shift back toward a Basic Health Program by July 1, 2026—pending approval from the Centers for Medicare & Medicaid Services (CMS). Impacted consumers will receive at least 90 days’ notice prior to eligibility changes and access special enrollment periods along with enhanced customer service support during this time.
A public comment period on this proposed transition opens September 10 through October 10, 2025; further details are available at https://info.nystateofhealth.ny.gov/1332.
