H.R. 1, the One Big Beautiful Bill Act of 2025, contains harmful modifications to premium tax credit (PTC) eligibility that would reduce New York hospitals’ revenues by an estimated $1.4 billion per year. This severe, disproportionate impact is due to targeted eligibility reductions for lawfully present immigrants to 1) qualify for Affordable Care Act (ACA) Marketplace subsidies and 2) enroll in the Basic Health Program (BHP), known in New York as the Essential Plan.
What is a Basic Health Program?
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 lawfully present individuals with incomes between 138% and 200% of the Federal Poverty Level (FPL) (New York received a 1332 Waiver allowing it to provide coverage for individuals up to 250% of FPL in its Essential Plan). The BHP also allows coverage for lawfully present individuals with incomes from 0-138% of the FPL who are ineligible for Federal Medicaid due to immigration status.
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. Lawfully present immigrants are currently eligible for both PTCs and BHP if they meet the applicable income criteria.
New York’s Essential Plan
About 1.6 million New Yorkers are enrolled in the Essential Plan—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 Essential Plan reimburses New York hospitals at significantly higher rates than the Medicaid program, which has long reimbursed hospitals well below the cost of care.
H.R. 1’s Changes to Premium Tax Credits and Essential Plan Eligibility
Section 112101, “permitting premium tax credit only for certain individuals,” and section 112102, “disallowing premium tax credit during periods of Medicaid eligibility due to alien status,” will significantly destabilize the Essential Plan, dramatically worsen hospitals’ ongoing financial challenges, and damage health care access in New York State.
The bill creates a new restrictive definition of “eligible alien” that severely limits the number of lawfully present individuals who are eligible for both PTCs and Essential Plan coverage. It also specifically excludes lawfully present immigrants with incomes up to 138% of FPL from PTC and Essential Plan coverage.
New York State Essential Plan Impacts
The bill’s policy changes would cause 500,000 lawfully present immigrants in New York State to lose eligibility for PTCs and the Essential Plan and convert to Stateonly Medicaid coverage. New York State is 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 and its counties would therefore be responsible for the full cost of covering this population, an estimated cost of nearly $3 billion annually. An additional 225,000 individuals with incomes above the Medicaid eligibility threshold would become uninsured.
In addition, New York State would lose $7.5 billion annually in Federal funding in the form of lost PTCs. This would put the Essential Plan’s existence and the health insurance of its 1.6 million enrollees in grave danger.
These dramatic changes would take effect quickly—January 1, 2026, for the Aliessa population, and January 1, 2027, for all other affected categories of lawfully present immigrants. It would be a tremendous challenge for New York State to comply with these short timeframes and cost the State an estimated $10 million in administrative costs.
Impacts on Hospitals
Hospitals would experience dramatic revenue losses because the Essential Plan reimburses at a much higher rate than Medicaid. New York State projects that the direct hit to New York hospitals from diminished revenues and higher uncompensated care costs from those losing Essential Plan coverage would be approximately $1.3 billion annually. These cuts are on top of the other Medicaid and enrollment cuts in the One Big Beautiful Bill Act.
| 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 would lose eligibility for PTCs and the Essential Plan. These individuals would shift to State-only Medicaid without Federal support, at a $2.7 billion annual cost to NYS. |
| 138-250% of FPL, Lawfully Present | 225,000 | This group consists of other non-Aliessa lawfully present immigrants. They would be ineligible for PTCs and Essential Plan Coverage 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. |
| 138-250% of FPL, Legal Permanent Resident or US Citizen | 869,000 | While this group maintains eligibility for PTCs and the Essential Plan, the 50% funding reduction to the Essential Plan overall from lost PTCs could diminish the scope of coverage or make it unviable.
If the Essential Plan were dismantled, this group could get more expensive, less robust coverage through the ACA marketplace. |