The Trump administration is seeking to end a controversial tax on Medicaid providers that has allowed New York to draw down billions in federal dollars, putting hospitals and nursing homes at risk of losing money.

Gov. Kathy Hochul signed the largest New York state budget in history into law last week for fiscal year 2026, committing billions to Medicaid and expanding health care protections for pregnant women, older adults and low-income New Yorkers, her office announced.

Gov. Kathy Hochul and Democratic lawmakers said they’ll likely return to Albany later this year and reopen the state budget if federal funding drops.

The state’s $254 billion budget, passed by lawmakers late Thursday, includes a series of health payment rate increases, including a 10% reimbursement bump for hospital outpatient services and the resurrection of a $500 million fund for financially distressed hospitals.

Low-income kids, pregnant women, babies, adults with disabilities, and many seniors in New York rely on Medicaid for health care. Here's how funding cuts could affect them.

The Republican budget plan, which will be voted on in the House of Representatives (mostly House Republicans), could impose the deepest cuts in the history of the Medicaid program

Over 300 rural hospitals had already been identified as being at "immediate risk" of shutting down, regardless of potential cuts.