NYC Health + Hospitals Faces Fiscal Challenges Amid Medicaid Cuts and Coverage Loss

New York City's Health + Hospitals (H+H), the nation's largest public health system, faces significant financial pressures stemming from federal Medicaid and Medicare reimbursement cuts, increased uninsured patient loads, and delayed supplemental Medicaid payments. According to a report from State Comptroller Thomas P. DiNapoli, these factors threaten H+H's fiscal stability and may require revisiting cost-cutting strategies. H+H operates 11 acute care hospitals, five skilled nursing facilities, and over 30 care locations, serving a high proportion of Medicaid, Medicare, and Essential Plan patients primarily with low incomes. Prior to the COVID-19 pandemic, H+H already faced budget challenges including declining service utilization, reduced federal funding, and a substantial share of uninsured patients. Its initiatives, originally launched in 2016 and rebranded as Strategic Initiatives by FY 2022, targeted $2.2 billion in savings for FY 2024 but realized just over $1.1 billion, mainly from enhanced billing, coding, documentation, managed care rate negotiations, supplemental Medicaid payments, and operational efficiencies. Supplemental Medicaid payments such as Disproportionate Share Hospital (DSH) and Upper Payment Limit (UPL) are critical but volatile revenue sources due to ongoing federal and state approvals and potential payment delays. In FY 2024, H+H anticipated receiving $1.1 billion in UPL funds but achieved only $170 million, deferring the remainder to FY 2025. Planned cost savings from departmental consolidations and service centralizations generated minimal returns. The FY 2025 financial plan lowered revenue expectations from strategic initiatives by hundreds of millions annually through 2028, reflecting the uncertainty in receiving supplemental payments. Additionally, cost savings related to restructuring and service cuts were reduced or deferred, with major restructuring avoided thanks to improved billing practices and supplemental revenue primarily from the city. The FY 2026 Executive Financial Plan projects $1.5 billion in strategic initiative savings in FY 2025 and anticipates an average of $2.4 billion annually from FY 2027 to FY 2029, heavily relying on UPL payments funded equally by federal and city sources. However, risks remain due to policy changes such as federal Medicaid eligibility restrictions under H.R.1 that are expected to reduce enrollment and increase uninsured patients, further straining H+H resources. Estimates from September 2025 indicate that approximately 950,000 New Yorkers will lose coverage due to Medicaid and Essential Plan cuts, increasing demand for uncompensated care at H+H facilities. Federal DSH payment reductions, delayed several times since FY 2014, will proceed starting FY 2025, with subsequent cuts through FY 2028, impacting H+H's budget by up to $622 million. State budget cuts totaling $57 million annually further reduce funds intended to offset care costs for Medicaid and uninsured patients, exacerbating the financial challenges. However, recent U.S. Centers for Medicare & Medicaid Services (CMS) approval of state-directed payments to H+H provides some short-term fiscal relief, though continuation of such approvals remains uncertain. This complex financial environment underscores the precarious position of public safety-net hospitals like H+H amid evolving federal and state health policy landscapes. Maintaining service levels while managing reduced reimbursements and an increasing uninsured population will require strategic financial planning and ongoing policy advocacy.