Nearly half a million New Yorkers are losing low-cost health insurance as federal cuts tied to President Donald Trump’s HR 1 law begin taking effect, turning a national budget fight into an immediate crisis for working people, immigrants, families, and community health providers.
The coverage losses began July 1, when New York’s Essential Plan stopped covering residents earning between 200 percent and 250 percent of the federal poverty level. Those enrolled have been able to receive no-premium or very low-cost coverage through the state program, which was expanded in 2024 under a federal waiver. With the rollback, many people who earn too much to qualify for Medicaid but too little to afford commercial insurance are being pushed into the private marketplace or out of coverage altogether.
The people affected are not high earners. They include single adults making roughly $32,000 to $40,000 a year, families already balancing rent and groceries, and lawfully present immigrants who may have few affordable alternatives. The Essential Plan had filled a gap in the Affordable Care Act by giving low-income residents access to coverage with minimal cost-sharing. Its contraction now shows how federal austerity can erase a state-level health care safety net almost overnight.
The immediate trigger is HR 1, the Republican-backed law signed in 2025 and often called the “One Big Beautiful Bill Act.” The law cut federal health spending and eliminated or restricted funding streams that New York had used to sustain the Essential Plan. State officials moved to preserve coverage for about 1.3 million people by reverting the program back to its Basic Health Program authority, but the change left roughly 450,000 to 500,000 people outside the income limits that now apply.
New York State of Health has said federal funding cuts in HR 1 mean the state can no longer offer the expanded Essential Plan to people earning between 200 percent and 250 percent of the federal poverty level. The federal Centers for Medicare and Medicaid Services approved New York’s request in March to transition back to Basic Health Program authority, preserving coverage for many lower-income enrolled, but ending the expansion that had covered hundreds of thousands more.
That choice prevents the full collapse of the Essential Plan, but it also creates one of the largest sudden coverage losses in New York’s recent history. For those losing coverage, the official alternative is to shop for a Qualified Health Plan through the state marketplace. But marketplace coverage often comes with monthly premiums, deductibles, and co-pays that did not exist under the same terms in the Essential Plan.
Health care navigators and advocates say that shift is not a simple plan change. It is a financial cliff.
Under the new rules, many people losing Essential Plan coverage may have to pay hundreds of dollars a month to remain insured. Times Union reported that residents earning between 200 percent and 250 percent of the federal poverty level may now face an additional $200 to $400 per month in health insurance costs. For households already living below a living wage, that can mean the difference between keeping coverage and going uninsured.
The burden falls hardest on people least able to absorb it. Times Union reported that about 6,000 DACA recipients are among those losing coverage, along with tens of thousands of refugees, asylum-seekers, and people with temporary protected status. Some lawfully present immigrants affected by HR 1 may be ineligible for federal premium tax credits, leaving them with few realistic coverage options.
“It is heartbreaking,” said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society.
The loss is also expected to strain community health systems beyond the individuals removed from the plan. Clinics, hospitals, and federally qualified health centers may see more uninsured patients delaying care until conditions worsen. That pattern can increase emergency room use, uncompensated care, medical debt, and pressure on already fragile providers.
Michael Kinnucan, health policy director at the Fiscal Policy Institute, told Healthbeat that the Essential Plan had covered about 1.7 million New Yorkers and had been unusually efficient because it pooled federal funding into a state-administered plan with low costs. After HR 1, he said, the program lost almost half of its federal funding. New York responded by shrinking eligibility back to 200 percent of the federal poverty level, undoing the 2024 expansion that had raised eligibility to 250 percent.
Those losing coverage are in an especially vulnerable income band. They are not poor enough under program rules to remain in the Essential Plan, but they are often not financially secure enough to absorb private insurance costs. Kinnucan told Healthbeat that many in this group could technically buy coverage on the individual market, but that premiums and high out-of-pocket costs would make coverage difficult to maintain.
That gap is where policy language turns into health consequences. A family may be eligible for a marketplace plan on paper, yet still unable to pay the premium or meet a deductible. A patient may remain enrolled for a month or two, then drop coverage when rent, food, child care, or transportation costs come due. Preventive care can become a luxury. Routine prescriptions can be delayed. Health conditions that could have been managed earlier can become emergencies.
The rollback also exposes a political choice at both the federal and state levels. HR 1 reduced health funding nationally while advancing tax and border-security priorities. New York then opted to preserve coverage for the largest remaining group of Essential Plan enrolled, but did not provide a state-funded replacement for the hundreds of thousands losing eligibility. Democratic lawmakers proposed measures to cover the group, but those proposals did not make it into the final state budget.
The result is a fragmented safety net. People under 200 percent of the federal poverty level remain covered. Those above that line face higher costs. Some immigrants are left with even fewer options. Community organizations are now trying to locate affected residents, explain plan changes, and help people enroll before deadlines pass.
The coverage loss in New York is also a warning for the rest of the country. Health policy analysts expect HR 1 to drive millions of people off insurance nationwide over the next decade, in part through Medicaid work requirements and reduced federal support for marketplace coverage. New York is first because its Essential Plan expansion depended on a specific federal financing structure, but the larger story is national: public coverage is being reduced while private coverage grows less affordable.
For New Yorkers losing the Essential Plan, the question is immediate. They must decide whether to buy more expensive coverage, risk going uninsured, or delay care. For the health care system, the question is what happens when hundreds of thousands of people lose the coverage that kept them connected to routine care.
Kinnucan put the stakes plainly: “It’s really a shared interest for all of us to make sure that everyone is covered.”
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