Keeping People Covered after the OBBBA
January 23, 2026 |
How to Prevent New York’s Health Insurance Crisis
Executive Summary
One of the most significant impacts of H.R. 1, the “One Big Beautiful Bill Act” (OBBBA), on New York’s healthcare system will be the imposition of work requirements on two million New Yorkers who are covered by the ACA’s Medicaid expansion. The bureaucratic hurdles created by these new requirements are expected to result in significant loss of coverage, with the State’s Department of Health estimating that up to 1.2 million New Yorkers could lose their health insurance.
Healthcare advocates have proposed that the State directly provide insurance coverage to this population, while our elected leaders have consistently argued that the State simply cannot afford to cover people—they will just need to go without healthcare. But this is a simplistic way of thinking about the issue. After all, denying health insurance to this population will not cause their healthcare costs to simply disappear. Uninsured people continue to use healthcare services, and those with life-threatening illnesses are entitled to hospital care regardless of insurance status. If government-funded insurance does not pay for their care then it will be paid for in some other way—at first, hospitals (especially safety net hospitals) will have to absorb the costs of uncompensated care; in the long-term, the State, which already spends billions of dollars annually bailing out hospitals for uncompensated care, will need to increase these payments.
Thus, the policy question confronting New York is not really whether to increase state health spending to compensate for federal cuts, but how to do so. Should the State step in to provide health insurance to the newly uninsured? Or should it pay for this healthcare through increased bailout payments to safety-net hospitals?
In this piece, I will offer a rough financial model of these alternatives. I find that disenrollment is likely to be substantial, but significantly lower than the State estimates—800,000 rather than the Department of Health’s widely cited 1.2 million. The disenrolled are likely to be disproportionately healthier and less expensive to cover than the average expansion enrollee. I estimate that New York could provide state-funded replacement coverage for the newly disenrolled at a cost of approximately $3.1 billion per year, but savings from reduced bailout costs would make the net expense only $2.3 billion annually.
Given the significant uncertainties associated with nearly every aspect of work requirement implementation, the State should use next year’s budget to mitigate the immediate impacts of coverage loss while exploring policy alternatives, such as a pilot program to extend temporary state-funded coverage for people disenrolled from federal Medicaid while providing assistance in meeting the new federal work requirements.
Keeping People Covered after the OBBBA
January 23, 2026 |
How to Prevent New York’s Health Insurance Crisis
Executive Summary
One of the most significant impacts of H.R. 1, the “One Big Beautiful Bill Act” (OBBBA), on New York’s healthcare system will be the imposition of work requirements on two million New Yorkers who are covered by the ACA’s Medicaid expansion. The bureaucratic hurdles created by these new requirements are expected to result in significant loss of coverage, with the State’s Department of Health estimating that up to 1.2 million New Yorkers could lose their health insurance.
Healthcare advocates have proposed that the State directly provide insurance coverage to this population, while our elected leaders have consistently argued that the State simply cannot afford to cover people—they will just need to go without healthcare. But this is a simplistic way of thinking about the issue. After all, denying health insurance to this population will not cause their healthcare costs to simply disappear. Uninsured people continue to use healthcare services, and those with life-threatening illnesses are entitled to hospital care regardless of insurance status. If government-funded insurance does not pay for their care then it will be paid for in some other way—at first, hospitals (especially safety net hospitals) will have to absorb the costs of uncompensated care; in the long-term, the State, which already spends billions of dollars annually bailing out hospitals for uncompensated care, will need to increase these payments.
Thus, the policy question confronting New York is not really whether to increase state health spending to compensate for federal cuts, but how to do so. Should the State step in to provide health insurance to the newly uninsured? Or should it pay for this healthcare through increased bailout payments to safety-net hospitals?
In this piece, I will offer a rough financial model of these alternatives. I find that disenrollment is likely to be substantial, but significantly lower than the State estimates—800,000 rather than the Department of Health’s widely cited 1.2 million. The disenrolled are likely to be disproportionately healthier and less expensive to cover than the average expansion enrollee. I estimate that New York could provide state-funded replacement coverage for the newly disenrolled at a cost of approximately $3.1 billion per year, but savings from reduced bailout costs would make the net expense only $2.3 billion annually.
Given the significant uncertainties associated with nearly every aspect of work requirement implementation, the State should use next year’s budget to mitigate the immediate impacts of coverage loss while exploring policy alternatives, such as a pilot program to extend temporary state-funded coverage for people disenrolled from federal Medicaid while providing assistance in meeting the new federal work requirements.