Politico Pro: Three key takeaways from New York's health care budget hearing
Lawmakers grilled state health officials and advocates for nearly 10 hours at the joint budget hearing.
Read the full article in Politico Pro
By: Katelyn Cordero, Maya Kaufman | 02/10/2026 09:26 PM EST
ALBANY, New York — New York lawmakers spent nearly 10 hours Tuesday listening to state health officials and advocates lay out their fiscal requests as they shape their budget proposals set to be released next month.
State Health Commissioner James McDonald and Medicaid Director Amir Bassiri fielded hours of questions from lawmakers about the state’s handling of funds received from a lucrative health plan tax, savings from the consolidation of a popular Medicaid program, health care affordability and the impact federal policy changes and funding cuts will have on New York.
Additionally, many lawmakers said they are concerned with the lack of support the state has given to rural health care institutions, particularly community health centers.
Here are the main takeaways from Tuesday’s hearing:
MCO tax spending has yet to be decided: Lawmakers were eager to hear about plans to spend roughly $1.2 billion in additional revenue from a tax on managed care organizations, but McDonald repeatedly told them he is “hoping to collaborate with you” on drafting up a spending plan for the funds.
The MCO tax went into effect in January 2025 and is now expected to net more than $3.2 billion through the end of this year, according to the state’s budget office. Gov. Kathy Hochul’s budget proposal assumed the tax would sunset on March 31, based on a draft federal regulation and President Donald Trump’s One Big Beautiful Bill Act.
Lawmakers expressed exasperation at Tuesday’s hearing when they learned the state has not distributed $1.4 billion in revenue raised by the MCO tax that was already allocated in the 2026 budget. Instead the state put the funds into a health care stability fund, as it awaited confirmation from the Centers for Medicaid and Medicare Services on how long it would be allowed to continue the tax.
Senate Health Committee Chair Gustavo Rivera told POLITICO that the state’s handling of the MCO tax money is a breach of trust, as they struck a deal with the Hochul administration last year regarding how the funds should be spent.
“It’s been allocated based on negotiations that happened between us and them, which is great, but now it means nothing,” Rivera said after McDonald’s testimony. “We’re not waiting for future approval, we’re talking about money that we’ve already allocated, that we’ve already collected. Get it out the damn door!”
Health care advocates laid out their pitches for how the state should use the remaining MCO tax funding. Helen Schaub, political director for 1199SEIU United Healthcare Workers East, said the state needs to use the proceeds to fortify the health care sector for later years, when the most significant health care cuts from the One Big Beautiful Bill Act, also known as H.R. 1, roll out and New York has to deal with the multibillion-dollar impact.
“This is the year to set ourselves up for the crisis to come,” Schaub said. “The problems are going to get much, much worse as the cuts kick in.”
The precise impact of H.R. 1 is still uncertain: As many as 1.5 million New Yorkers could lose health insurance due to H.R.1. Lawmakers eagerly sought the state’s latest estimates, but Medicaid Director Amir Bassiri indicated that lingering uncertainty over the future of the state’s Essential Plan — which provided coverage to 1.7 million New Yorkers — is complicating matters.
Bassiri said the state has put together a team of experts that meets “practically every day” to work through implementation of H.R. 1, including new Medicaid work requirements that kick in next year. He said about 500,000 New Yorkers should be exempt from the new requirements based on a variety of data sources.
But the state has yet to receive federal guidance on implementation, which is not due until this summer.
“We’re flying the plane as we go,” Bassiri said.
Assembly Health Committee Chair Amy Paulin called on Bassiri and McDonald to include a “robust” plan for how it will address the potential loss of coverage in the governor’s 30-day budget amendments expected to come out later this month.
Rural health care is still a concern: Several lawmakers raised concerns about the state’s slow release of MCO tax funding that was expected to back-stop providers in rural parts of the state, like community health centers.
New York is set to receive $212 million from the Trump administration’s Rural Health Transformation Program, which McDonald said would be used to bolster and improve employee recruitment and retention for facilities and improve technological infrastructure.
Lawmakers on both sides of the aisle expressed concerns regarding the state’s lack of investment in rural health providers, stating that the federal funding is not enough. Republican Sen. Pamela Helming said her constituents are experiencing growing barriers to care, a sentiment expressed by several lawmakers from rural districts.
“Nothing was specifically addressed at improving access to care in our rural communities,” Helming said to McDonald and Bassiri. “We can blame the federal government all we want, but for years and years the state has underfunded the community health centers and our small hospitals with low Medicaid reimbursement rates. What are we doing to fix that?”