ALBANY — New York is on track to lose out on $750 million in Medicaid funding this year thanks to the federal budget cuts agreed to in Washington last week.

State officials also expect to see at least $3 billion in federal funding disappear in the next fiscal year.

Blake Washington, budget director for Gov. Kathy Hochul’s Executive Budget Division, spoke with reporters in the Capitol Thursday to detail the first of his office’s findings on the impact of the Republican-led cuts to Medicare, Medicaid, SNAP and other programs. The bill containing those cuts, named the “One Big Beautiful Bill,” was signed into law by Trump on July 4.

The biggest and most immediate impact comes with a federal cut to available tax credits for people on expanded Medicaid plans — which provide Medicaid coverage to people making up to 138% of the federal poverty line. New York also relies on federal funding in part to support its Essential Plan, which provides Medicaid-like coverage for people making up to 250% of the federal poverty line.

The GOP budget cuts back on federal cost sharing for Medicaid expansion coverage, which impacts both the Essential Plan and Affordable Care Act insurance plans as well.

“We are projecting a roughly $750 million impact in the current fiscal year as a result of that provision alone,” Washington said.

In the next fiscal year, which for New York start on April 1, 2026, Washington said that at least $3 billion in cuts are anticipated — largely because of the Medicaid program changes.

“The $3 billion is a state financial plan impact, it doesn’t really state what that means for persons who lose their health insurance coverage, there will be tens of thousands in the state of New York that do lose their health insurance over the coming years,” Washington said, noting that Medicaid, expansion plans, the Essential Plan and Child Health Plus, known as CHIPS coverage, cover nearly 50% of the state’s population.

The federal budget also makes changes to how New York can finance its Medicaid program — which is by far the most expensive Medicaid program in the country. In the state budget this year, lawmakers enacted a two-year “MCO tax,” which charges the private companies that provide Medicaid customers with services a flat fee per Medicaid customer per month. That money is then used to prop up the state’s Medicaid program, sent to hospitals and providers that have higher Medicaid patient numbers, aren’t turning profits and require extra assistance.

The state expected to collect MCO taxes this year and next year, but the federal bill enacted on July 4 bans MCO taxes effective January 1.

That has an impact on hospitals across New York, Washington said.

“Only getting that for one year and not two, that has a direct impact on hospitals and health sector services as well,” he said.

Washington said the MCO tax was expected to generate $1.8 billion for the state’s Medicaid program next year.

“For providers that are relying on the MCO tax, it’s a revenue source that will not be available to them,” he said.

Washington said the $750 million in extra costs this year is largely to fulfill the state’s legal obligation to provide Essential Plan coverage, and the extra costs next year include that and the cost of system upgrades to keep the health care plan operational as the federal government shifts eligibility requirements to be more arduous and time consuming.

Effective 2027, Medicaid will have a 6-month renewal requirement, as will SNAP, and Medicaid will have a work requirement for young, able-bodied recipients. Tracking worked hours and redoing eligibility interviews takes time, and the state is tasked with paying a large percentage of local Department of Social Services staff salaries to administer these programs.

For hospitals, Washington said the MCO cuts will have a substantial impact, as well as the loss of Medicaid revenue for patients who come in for treatment. Hospitals have a legal obligation to deliver emergency care to anyone regardless of insurance status or ability to pay, and officials have said the cut in Medicaid coverage will be a one-two punch for those services; people who lose or are not longer able to access Medicare coverage will go without necessary preventative treatments, meaning they’re more likely to need emergency care eventually, and they will be unable to pay for that emergency care when they do need it.

“As it relates to hospitals, it’s going to be a problem shared urban and rural alike,” Washington said. “Urban Safety Net providers will feel this as acutely as will rurals.”

Washington noted that in New York, the medical system is largely interconnected; wealthier, more profitable downstate hospitals that see fewer Medicare and Medicaid patients and turn positive revenue each year pay taxes and fees that are redistributed to rural hospitals that are less likely to be profitable and have a majority of patients covered with Medicare, Medicaid or another publicly-financed insurance plan. Medicare and Medicaid payouts typically do not cover the costs of providing care entirely.

“There’s an interdependency in the state of New York, between upstate, downstate and everywhere in between,” he said. “They’re all very concerned about this bill. You can hear from any one of the hospital associations, all of them have the broadest possible reach and all of them are saying the exact same thing, about the destabilizing impact of all this.”

Washington said this is just the first look at the impacts of the federal budget now in place, and he would likely share more information as his office reads more of the bill and does the math on the impact for New York.

State lawmakers have for months been eyeing this federal budget bill warily — Democrats who run the show in Albany have hammered the state’s Republican Congressmembers, urging them to oppose the bill largely because of the massive cuts it makes to Medicaid coverage for New York. Officials including Hochul have repeatedly said New York is unable to backfill the proposed cuts, and have floated the idea of calling a special legislative session to adjust state spending plans and laws to cushion the budgetary blow. Lawmakers made no adjustments to the state budget passed this year in anticipation of these cuts.

Washington on Thursday said the door was still open to a special session later this year, but didn’t say a definitive plan was in place.

Comptroller Thomas DiNapoli has been critical of the governor and legislative approach, making no adjustments to the state spending plan in anticipation of federal cuts; he acknowledged the two extraordinary steps lawmakers made this year to prepare, giving the governor unilateral power to cut spending it deficits reach $2 billion or more, and a record-high $8.8 billion fund reserve balance meant to be used to backfill budget gaps.

“There should be a renewed emphasis on efficiency in state services, including implementing recommendations made in audits issued by my office. Finally, the broad potential impacts of federal changes make it necessary to begin developing a strategy or articulating criteria for how the state will respond fiscally,” DiNapoli wrote in a budget review report shared last month.

Washington said his team is doing just that, but nobody is prepared to pony up another $3 billion to backfill spending gaps.

“There’s no state in the union that could do that, and particularly to do it on a recurring basis,” he said.

The state has set aside billions for what Washington termed “wants, not needs,” including a $2 billion inflation refund check program set to go out to most state taxpayers this fall. Washington said saving that money now would not address the long-term funding cuts on the table now.

“The problem that still remains with affordability among New Yorkers, throughout the state of New York,” he said. “That doesn’t go away because Congress passed a bill that’s going to take away health coverage or modify some of their programming in the upcoming years. People have problems now, today.”