State Comptroller Thomas P. DiNapoli warned on Dec. 10, 2025, that federal Medicaid cuts could blow a deep hole in NYC Health + Hospitals’ finances, projecting up to $622 million in lost disproportionate-share funding for the nation’s largest public hospital system as Washington pulls back on health-care spending.
The report laid out a difficult arithmetic for H+H, which runs the city’s 11 public hospitals plus clinics and nursing homes and serves as the safety net of last resort for uninsured and undocumented New Yorkers. “Federal legislation and regulatory changes — and how the state reacts — could significantly alter the level of support H+H receives,” DiNapoli said.
A coverage cliff
The most immediate threat is to coverage. As of September 2025, the city’s Department of Social Services estimated that roughly 950,000 New Yorkers could lose health insurance under the federal law known as H.R. 1 — about 800,000 from Medicaid and 150,000 from the Essential Plan. Fewer insured patients means less reimbursement for the hospitals that treat them, and a larger pool of uncompensated care for a public system already absorbing the costs of patients no other hospital will take.
Compounding the squeeze, the federal government is moving to reduce disproportionate-share hospital (DSH) payments, the supplemental funding that helps safety-net hospitals cover charity care. DiNapoli’s office pegged the potential DSH hit to H+H at as much as $622 million.
The 1115 waiver in the crosshairs
New York’s broader Medicaid strategy also faces federal headwinds. The state’s roughly $7 billion Section 1115 waiver, renewed in 2022 and running through March 31, 2027, funds health-equity regional organizations and workforce-development programs. In 2025, the Trump administration moved to phase out federal funding for certain “Designated State Health Programs” embedded in such waivers — including hundreds of millions earmarked in New York for training mental-health, health-care and social-care workers — and Congress wrote stricter budget-neutrality requirements into law, narrowing the flexibility states had previously enjoyed.
H+H’s savings gamble
To stay solvent, NYC Health + Hospitals is leaning on aggressive cost-cutting. Its financial plan targets about $939 million in strategic-initiative savings in FY2026 and an average of $2.4 billion annually from FY2027 through FY2029. But the system has a mixed record on hitting those marks: in FY2024 it aimed for $2.2 billion in savings and achieved $1.1 billion, and projected federal “upper payment limit” revenue of $1.1 billion materialized as just $170 million.
State budget documents underscore how broad the strain is, estimating that 75 of 261 hospitals statewide — about 29% — are financially distressed.
What’s at stake for patients
For New Yorkers, the abstractions of DSH and budget neutrality translate into concrete stakes: whether emergency rooms, maternity wards and clinics in the Bronx, Brooklyn and beyond stay open and staffed. H+H absorbed higher labor costs from the 2026 nurses’ strike settlements even as its revenue outlook darkened, and it is simultaneously being asked to stabilize private safety-net partners like Maimonides under the state’s $2.6 billion transformation program.
The next act, as DiNapoli’s framing makes clear, depends heavily on Albany — on whether the state backfills federal losses or passes them through to the city. For Mayor Zohran Mamdani’s administration, which has pledged to protect public services, the health system’s fiscal cliff is among the most expensive problems it inherited.
Verification
- DiNapoli Dec. 10, 2025 report: federal changes could significantly alter H+H support; up to $622M in projected DSH cuts; ~$939M FY2026 and ~$2.4B/yr FY2027–29 savings targets; FY2024 achieved $1.1B of $2.2B target; UPL revenue $170M vs $1.1B projected; DiNapoli quote — https://www.osc.ny.gov/press/releases/2025/12/dinapoli-nyc-health-hospitals-confront-tough-fiscal-outlook-washington-moves-cut-health-care-spending
- ~950,000 New Yorkers could lose coverage (800,000 Medicaid + 150,000 Essential Plan) under H.R. 1; ~29% of NY hospitals financially distressed — https://council.nyc.gov/budget/wp-content/uploads/sites/54/2025/03/New-York-City-Health-and-Hospitals-Corporation-2.pdf
- NY $7B Section 1115 waiver effective through March 31, 2027; 2025 federal moves to phase out DSHP funding and tighten budget neutrality — https://rockinst.org/blog/recent-healthcare-developments-that-impact-new-yorks-existing-1115-medicaid-waiver/ ; https://www.health.ny.gov/health_care/medicaid/redesign/1115_waiver/
- State investments in safety-net hospitals as offset (Maimonides–H+H transformation) — https://www.governor.ny.gov/news/governor-hochul-unveils-transformative-investments-six-safety-net-hospitals-and-health-care
Frequently Asked Questions
- What did Comptroller DiNapoli warn about?
- In a Dec. 10, 2025 report, State Comptroller Thomas DiNapoli warned that federal legislation and regulatory changes could significantly alter the support NYC Health + Hospitals receives, projecting up to $622 million in federal disproportionate-share (DSH) cuts to the public hospital system.
- How many New Yorkers could lose coverage?
- As of September 2025, the NYC Department of Social Services estimated 950,000 city residents could lose coverage under the federal law — about 800,000 from Medicaid and 150,000 from the Essential Plan.
- How is H+H trying to close its gaps?
- NYC Health + Hospitals is pursuing large strategic-initiative savings — about $939 million in FY2026 and an average of $2.4 billion annually in FY2027–FY2029 — though it has historically achieved less than it targeted.
- What is the 1115 waiver and why does it matter?
- New York's $7 billion Section 1115 Medicaid waiver runs through March 2027 and funds health-equity and workforce programs. Federal moves in 2025 to phase out certain waiver-funded programs and tighten budget-neutrality rules put parts of it at risk.