ALBANY, N.Y. (NEXSTAR) — Hundreds of thousands of New Yorkers are losing their health insurance on July 1. Because the One Big Beautiful Bill Act of 2025 slashed subsidies, the state was forced to scale back the Essential Plan, a federally subsidized, state-run health program for poor New Yorkers.
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A federal waiver saved the program for 1.3 million people, but about 450,000 New Yorkers with incomes between 200% and 250% of the federal poverty line are being dropped from the rolls. But the state is also trying to prevent another mass disenrollment triggered by President Donald Trump.
The OBBBA squeeze on New York’s Medicaid system also included new work requirements. While it exempted “medically frail” individuals from those requirements, a rule circulated by the federal Centers for Medicare and Medicaid Services as of June 3 forces them to prove that their condition “significantly impairs” their ability to work.
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And, starting in 2028, patients won’t be able to self-attest to their medical conditions by simply signing a form. That’s why, on Monday, Democratic New York State Attorney General Letitia James joined 24 other states to sue in an effort to cut through that red tape. The lawsuit, filed against CMS and the Department of Health and Human Services, is available to read at the bottom of this story.
The lawsuit argued that the rule violates the Administrative Procedure Act and the Constitution by imposing surprise retroactive conditions on the law after states had already spent millions to prepare for it. It asked the court to block the new CMS rule, warning that it would make New York’s uninsured population spike by 45%.
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According to James, requiring extra paperwork violates federal law and will remove lifesaving coverage from New Yorkers fighting cancer, managing mental health conditions, or recovering from addiction. The New York State Department of Health estimated that the combined impact of these work requirements and more frequent eligibility checks will kick at least 475,000 more New Yorkers off Medicaid…