New York’s FY2026-2027 final budget has sparked intense scrutiny from patient advocacy groups across the state, highlighting critical gaps in health coverage as federal policy shifts take effect. The Health Care For All New York (HCFANY) coalition welcomed specific state measures designed to enhance consumer transparency and protect continuity of care. At the same time, advocacy leaders expressed deep concern that the financial plan leaves half a million vulnerable residents exposed to sudden coverage losses.
The state legislative package arrives as healthcare systems brace for the broader fallout of federal legislation. On July 4, 2025, President Donald Trump signed HR1—frequently referred to as the “One Big Beautiful Bill Act”—which drastically alters eligibility and funding for health insurance for New Yorkers. Projections from the New York Department of Health indicate that approximately 1.5 million state residents, spanning both citizens and immigrants, risk losing their health insurance as federal provisions roll out over the next couple of years.
Despite these mounting headwinds, HCFANY commended the Governor and the State Legislature for enacting targeted policies aimed at preserving affordability. Yet, the coalition cautioned that structural flaws in the newly adopted state budget require urgent legislative remedy before the upcoming implementation deadlines.
Mitigating Federal Losses and Essential Plan Gaps
A central friction point in the new budget involves the state’s ongoing transition of the Essential Plan. Last September, Governor Hochul formally requested to terminate New York’s Section 1332 Waiver to return the Essential Plan to the Basic Health Plan framework under Section 1331 of the Affordable Care Act. The Centers for Medicare and Medicaid Services formally approved this transition in March, setting a completion date of July 1, 2026.
While the administrative pivot moves forward, HCFANY sharply criticized the final budget for omitting dedicated state funding to bridge coverage gaps for roughly 500,000 New Yorkers who stand to lose health insurance this July. This affected population includes Essential Plan enrollees with household incomes between 200 and 250 percent of the Federal Poverty Level, individuals holding DACA and PRUCOL statuses, and lawfully present immigrants who will lose eligibility for premium tax credits.
Advocacy groups actively backed a legislative fix during budget negotiations—specifically proposal S9589/A10926, championed by Senator Rivera and Assemblymember Paulin—which sought to maintain state-funded coverage for this exact demographic. Because the final budget omitted this funding, HCFANY has urged lawmakers to revisit the issue and establish relief funds in subsequent legislative sessions. Simultaneously, the final budget moves to terminate the state’s continuous coverage program for children ages zero to six this July, despite a federal 1115 Waiver that previously permitted the program to run through March 2027.
Continuity of Care and Utilization Review Reforms
On a more positive note for insured patients, the budget introduces meaningful consumer protections regarding network stability and administrative hurdles. Under the revised continuity of care rules, patients facing network disruptions receive clearer safeguards. When a physician leaves a health plan’s network, patients retain the right to see their current provider at in-network cost-sharing rates for up to 90 days, or through the completion of postpartum care if applicable.
When a patient switches health plans and finds their existing provider outside the new network, individuals diagnosed with life-threatening medical conditions may maintain in-network pricing for up to 60 days—expanding to 90 days starting January 1, 2027—provided the treating physician agrees to accept the new plan’s reimbursement rates and rules. Pregnant patients switching plans retain access to their provider through the end of postpartum care.
Additionally, the budget tackles administrative fatigue by cracking down on repetitive health plan utilization reviews. Insurers are now prohibited from conducting medical necessity reviews more than once per year for patients managing chronic conditions, unless the attending physician modifies the patient’s treatment plan.
Enhancing Consumer Transparency and Marketplace Rules
The legislative package introduces transparency mandates for insurers operating on the New York State of Health Marketplace, aligning closely with the state’s 2027 Plan Invitation. The Department of Financial Services Consumer Guide will now incorporate detailed data regarding plan grievances, pre-authorization approvals, adverse determinations, and appeals.
To further protect patients from unexpected out-of-network bills, the budget requires public notice before contracts lapse between hospitals and health plans. Insurers must also make their formulary drug lists accessible to the public without requiring account registration or password creation, simplifying prescription drug comparisons.
Healthcare Pricing and Oversight Controversies
Despite these consumer-friendly additions, watchdogs expressed disappointment over diluted oversight regarding healthcare market transactions. An executive proposal that would have required the Department of Health to conduct intensive reviews of healthcare business transactions concerning cost, quality, market competition, and health equity was omitted from the final agreement.
The final budget also excludes Medicaid beneficiaries from the independent dispute resolution process. The independent dispute resolution mechanism was originally designed to protect consumers from surprise medical bills by employing neutral third-party arbitrating entities to resolve payment disputes between insurers and out-of-network medical providers.
As state agencies begin implementing the complex provisions of the FY2026-2027 financial plan, stakeholders await upcoming administrative rulemakings and guidance from the New York State Department of Health and the Department of Financial Services ahead of the July rollout. Share your thoughts or join the discussion in the comments below.