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When President Trump signed H.R.1., the "One Big Beautiful Bill Act" into law on July 4 2025, he implemented budget cuts that are now affecting many New Yorkers. H.R.1., also known as the federal budget reconciliation bill, eliminated funding for New York's expanded Essential Plan.
The Essential Plan is a low-cost health insurance plan created in 2016 with Affordable Care Act funding. To date, 1.7 million New Yorkers rely on the plan for coverage, but because of cuts made by H.R.1., approximately 450,000 middle-class New Yorkers are set to lose that coverage.
The health benefit cuts in New York are just the beginning of a much larger problem. Other states face the impact of federal funding changes, and some are already responding and being forced to make difficult decisions that could affect Americans' health care access, retirement plans, and more.
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Why New York residents are losing health coverage
In 2024, the federal government approved a waiver allowing New York to expand Essential Plan coverage to New Yorkers with incomes from 200 to 250% of the Federal Poverty Level. But when H.R.1. eliminated half of the Essential Plan's funding, New York decided to terminate the waiver that expanded the program. As of July 1, 2026, the approximately 450,000 middle-class New Yorkers who received coverage through that waiver will lose their coverage.
Approximately 1.3 million Essential Plan enrollees with income below 200% of the Federal Poverty Level will retain their coverage.
What displaced New York enrollees are facing
The 450,000 New Yorkers displaced from the Essential Plan will transition to Qualified Health Plan coverage, but they'll face significant changes. Under the Essential Plan, those New Yorkers pay $0 in premiums and have minimal cost-sharing. Under a Qualified Health Plan, New Yorkers may pay monthly premiums and have higher deductibles; deductibles can potentially cost thousands of dollars before coverage takes effect.
The timing of this transition is made extra difficult by inflation, including high food and housing costs, as well as the recent surge in energy and gas prices spurred on by the war in the Middle East.
The national impacts of H.R.1. on health care
H.R.1. has significant national impacts on health care. It cuts federal funding for Medicaid by $1 trillion over the course of 10 years, and the Congressional Budget Office (CBO) estimates that such cuts will cause 11.8 million individuals to lose their Medicaid coverage. Additionally, approximately 3.1 million individuals will lose Medicaid coverage that they have through marketplace plans.
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How H.R.1. will affect rural communities
It's likely that rural areas will be the most affected. According to a KFF analysis, Medicaid covers 1 in 4 adults in rural areas, which is higher than its coverage in urban areas. Rural areas may see significant impacts because of the increased dependence on Medicaid and federal funding.
Several states are already reacting to the effects of those funding cuts.
Colorado: Dental provider rate cuts
In an effort to rebalance the Colorado budget after H.R.1. reduced its revenue and created a budget gap, Colorado Governor Jared Polis made more than $250 million in cuts in September 2025. That included cutting dental provider rates.
The reduction in dental provider rates may make it challenging for providers to still provide care. As workforce and supply costs continue to increase, but provider rates are decreased, providers may face financial challenges. The cuts may also make it difficult for Medicaid patients to get the care they need, and if dental services are delayed, small issues can become larger and more expensive ones.
North Carolina: Service eliminations, staff reductions, and Medicaid provider cuts
North Carolina is anticipating the federal funding cuts to result in service eliminations and staff reductions, meaning the cuts could also affect employees, not just healthcare service recipients.
The cuts will also likely make it more challenging for Medicaid recipients to find providers. Medicaid payment rates are already lower than the rates that providers receive from Medicare or other insurance providers, prompting some providers to avoid treating patients who have Medicare coverage. North Carolina is cutting Medicaid program pay by 3% because of funding gaps, so finding a provider may be even more challenging.
Montana and North Carolina: Cost-sharing premiums for Medicaid
In July 2025, Montana proposed Medicaid changes, including a cost-sharing model for Medicaid expansion recipients. Recipients would pay monthly premiums starting at 2% of their household income; those premiums would increase if the individual remained on the program for longer than two years.
New Hampshire also passed legislation in June to charge premiums to some Medicaid participants. Enrollees with incomes of 100% or more of the Federal Poverty Level would be required to pay a fee to receive Medicaid. However, H.R.1. implements cost sharing for some enrollees beginning in October 2028, and it also caps cost sharing at $35 per service, which may affect states' abilities to implement their own cost-sharing policies.
Bottom line
We have likely only seen the beginning of the H.R.1. Impacts on health benefits and care. More state-level announcements of benefit changes, eligibility tightening, and new cost-sharing requirements are expected to roll out in phases. When state legislatures convene in 2026, they're likely to develop responses to funding gaps, so expect more information and changes to be released later this year and beyond. This is the time to prepare yourself financially and be ready for potential changes to health coverage.
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