Council hearing warns federal cuts will strain city hospitals, push up uninsured rates

The New York City Council convened an oversight hearing on federal funding cuts on July 26, 2025, where council members and health-sector witnesses laid out extensive warnings about the immediate and longer-term effects of the reconciliation bill known in testimony as the "1 Big Beautiful Bill Act" and related federal policy changes.

Council Member Lincoln Ressler opened the hearing by saying the bill was "a disastrous bill for the country and for our city," adding that the measure "provides tax cuts for the rich and takes resources from the most vulnerable." He told the committees the council would press the city and state to plan for the consequences.

Why it matters: Witnesses described a chain reaction that could begin within months — large numbers of people losing coverage, reductions in reimbursements, and higher uncompensated-care costs that will hit safety-net hospitals hardest. Hospital leaders said those losses could force service reductions, layoffs and even closures in facilities that serve low-income neighborhoods.

Key testimony and evidence

- Marla Simpson of the Independent Budget Office told the committees the IBO is preparing a report series called Federal Changes, Local Impacts and said: "Since the passage of the 1 Big Beautiful Bill Act in July, IBO has focused on how these changes will affect New Yorkers as they cascade through multiple funding streams." She noted timing: some state-level impacts show up in fiscal 2027, but individuals could feel changes as early as January 2026.

- Elizabeth Wynne of the Greater New York Hospital Association testified that the hospital sector faced an immediate revenue shock. "We estimate an $8,000,000,000 direct revenue impact on our hospitals," Wynne said, and added that H+H's FY2025 operating budget was about $13.5 billion and that "as a result of the changes in HR 1, 34,000 hospital jobs will be at risk."

- Witnesses and council members emphasized two provisions with prompt effect: the loss or phase-out of the managed care organization (MCO) tax contribution and changes to New York's Essential Plan eligibility. Wynne called the MCO tax sunsetting "an immediate concern" because it funded a roughly $1.6 billion Medicaid support mechanism and a 10% outpatient rate increase that helped safety-net hospitals.

Discussion highlights and concerns

- Coverage losses: Panelists repeated state estimates that nationwide and statewide coverage losses could be large: about 1.5 million New Yorkers statewide losing insurance and roughly half of that impact concentrated in the city in certain scenarios. IBO and Greater New York explained that last-week changes by the governor to revert eligibility rules for the Essential Plan could avert some losses but that the state needs federal approval for its mitigation approach.

- Hospital finances and jobs: Wynne and other industry witnesses described an $8 billion operating revenue risk and estimated 34,000 health-sector jobs at risk; that job loss would ripple into the broader economy, they said.

- Safety-net concentration: Witnesses repeatedly noted that hospitals with the highest Medicaid and uninsured shares would be the most vulnerable. H+H was singled out as particularly sensitive because 28% of its revenue came from city operating subsidies in 2025 and more than half of its adult patients are Medicaid or uninsured.

- Program-by-program ripple: SNAP, WIC, and other food supports were raised as near-term risks that would push more people toward emergency food programs already under strain; behavioral-health and maternal services were singled out among clinical services most likely to be cut if hospitals tighten budgets.

Council and witness proposals

Witnesses and council members urged a mix of federal advocacy and immediate local planning: press Washington for delays or waivers (including a multi‑year transition for the MCO tax), accelerate enrollment and retention assistance to keep people covered, expand primary care and community clinic capacity, and plan city budget contingencies to backfill critical programs if state and federal mitigation fall short.

Representative direct quotes

- "This is a disastrous bill for the country and for our city," Council Member Lincoln Ressler. - "We estimate an $8,000,000,000 direct revenue impact on our hospitals," Elizabeth Wynne, Greater New York Hospital Association. - "Since the passage of the 1 Big Beautiful Bill Act in July, IBO has focused on how these changes will affect New Yorkers," Marla Simpson, Independent Budget Office.

Ending

Committee members said the hearing was the beginning of a longer process. They asked city budget staff and outside experts to provide further modeling and scenario planning and pressed for legislative and administrative actions the city could take to limit harm. The council signaled it will continue pressing the state and federal delegations while using the city's budget tools to blunt the worst outcomes.

(Reporting from an oversight hearing; no final votes were taken.)