The One Big Beautiful Bill Act of 2025 (OBBBA) eliminates eligibility for most lawfully present immigrants to qualify for Affordable Care Act (ACA) Marketplace subsidies. The law’s changes to premium tax credit (PTC) eligibility will severely destabilize New York’s Basic Health Plan (BHP) and reduce New York hospitals’ revenues by an estimated $1.35 billion per year. New York’s BHP is known as the Essential Plan (EP).
What is a Basic Health Plan?
The ACA gives states the option to implement a BHP (only New York, Oregon, and Minnesota have done so). BHPs provide low-cost health insurance to individuals up to 200% of the Federal Poverty Level (FPL) who are not otherwise eligible for the Federal Medicaid program either due to their immigration status or income. (New York received a 1332 Waiver allowing it to provide EP coverage for individuals up to 250% of FPL.)
Under a BHP, the state contracts directly with insurers to cover enrollees on plans separate from the standard ACA Marketplace plans. The Federal government essentially funds the BHP by paying the state 95% of the Marketplace PTCs that BHP enrollees would have qualified for if they were enrolled in a Marketplace plan. Today, lawfully present immigrants are eligible for both PTCs and BHP if they meet the applicable income criteria.
About 1.6 million individuals are enrolled in New York’s EP—a key reason why New York has one of the lowest uninsured rates in the nation (less than 5%). Maintaining a high population of insured individuals helps decrease uncompensated care for hospitals. The EP reimburses New York hospitals at significantly higher rates than the Medicaid program, which has long reimbursed hospitals well below the cost of care.
The OBBBA’s Changes to PTCs Will Cripple the EP
The law’s restrictions on PTC eligibility will significantly destabilize the EP, dramatically worsen hospitals’ ongoing financial challenges, and damage health care access across New York State.
The law creates a new restrictive definition of “eligible alien” that severely limits the number of lawfully present individuals who are eligible for PTCs. It also specifically excludes lawfully present immigrants with incomes up to 100% of FPL from PTC eligibility. Though restrictions on BHP eligibility were removed from the final bill, the restrictions on PTC eligibility have the same end effect by removing Essential Plan funding.
New York State Essential Plan Impacts
The OBBBA’s changes to PTC eligibility will cause 500,000 lawfully present immigrants in New York State to lose eligibility for PTCs and the EP and convert to State-only Medicaid coverage. New York State is constitutionally required to provide Medicaid coverage to this “Aliessa” population due to a 2001 New York State Court of Appeals case (Aliessa v. Novello) that found the State’s Constitution requires New York to provide health coverage to lawfully present immigrants who are barred from Federal Medicaid coverage due to their alien status. New York State will therefore be responsible for the full cost of covering this population at an estimated cost of nearly $3 billion annually. An additional 225,000 individuals with modest incomes above the Medicaid eligibility threshold will likely become uninsured because they will be unable to afford Marketplace coverage without PTCs.
New York State will lose an estimated $7.5 billion annually in Federal funding in the form of lost PTCs. This will put the EP’s existence and the health insurance of its 1.6 million enrollees, even those who remain eligible for PTCs, in grave danger.
These dramatic changes take effect quickly—January 1, 2026, for the Aliessa population below 100% FPL, and January 1, 2027, for all other affected categories of lawfully present immigrants. It will be a huge logistical and financial challenge for New York State to comply with these short timeframes.
Impacts on Hospitals
Hospitals will experience dramatic revenue losses because the EP reimburses at a much higher rate than Medicaid (up to a 125% difference). New York State projects that the direct hit to New York hospitals from diminished revenues and higher uncompensated care costs from those losing EP coverage would be approximately $1.35 billion annually. These cuts are on top of the OBBBA’s other Medicaid and enrollment cuts.
| Essential Plan Category | Enrollment | Impact of Reconciliation Bill |
|---|---|---|
| 0-138% of FPL, Lawfully Present or Legal Permanent Resident (Green Card) | 500,000 | Also known as the Aliessa population, New York is constitutionally required to provide Medicaid coverage to this group. The group will lose eligibility for PTCs. These individuals would shift to State-only Medicaid without Federal support, at a $2.7 billion annual cost to NYS. These changes take effect January 1, 2026, for the vast majority of the Aliessa population, with the remaining very small subset losing PTC eligibility January 1, 2027. |
| 138-250% of FPL, Lawfully Present (but not Legal Permanent Resident or US Citizen) | 225,000 | This group consists of other non-Aliessa lawfully present immigrants. They will be ineligible for PTCs due to immigration status and do not qualify for Medicaid. They would also be ineligible for State-only Medicaid due to exceeding the income eligibility threshold. They would become uninsured, increasing uncompensated care costs for health care providers. These changes take effect January 1, 2027. |
| 138-250% of FPL, Legal Permanent Resident or US Citizen | 869,000 | While this group maintains eligibility for PTCs and the EP, the 50% funding reduction to the EP overall from lost PTCs could diminish the scope of coverage or make it unviable.
If the EP were dismantled, this group could get more expensive, less robust coverage through the ACA marketplace, to the extent affordable. |
| Total EP Enrollment | 1.6 million |