Hospitals warn of 'financial crisis' amid state budget battle

And the NY-11 redistricting case has been dismissed.

Good afternoon — It’s Thursday and Certified Nurses Day.

In today’s CapCon:

• Hospitals in New York say the state budget can cushion a “financial crisis” brought on by federal changes, if they receive enough funding.

• The lawsuit that sought to force the redrawing of New York’s 11th Congressional District has been pulled by its plaintiffs.

• A new bill seeks to leverage distributed energy sources to lower costs and emissions; another bill to enact stricter scrutiny of utilities has been amended.

• Under a newly introduced bill, Tenants who aren’t citizens would be explicitly protected from discrimination.

• New York has released a plan to implement extended nuclear energy subsidies for comment and is proposing new rules around radiology services.

Names in today’s CapCon: Kenneth Raske, Kathy Hochul, Nicole Malliotakis, Michelle Hinchey, Rachel May, Kevin Parker

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News on the state budget, including proposals, negotiations and results.

Kenneth Raske from the Greater New York Hospital Association and Hochul on Thursday (New York Governor’s Office)

🏥 How much hospitals want from Hochul’s proposed $1.5 billion in health care spending

Hospitals across New York are bracing for significant funding shortfalls by 2028 as a result of changes enacted in the “One Big Beautiful Bill.”

Kenneth Raske, president of the Greater New York Hospital Association, told me Thursday that the total statewide impact of the federal law on hospitals will be about $8.5 billion when it’s fully phased in.

“It’s so significant that it will throw every institution into a financial crisis across the state — sparing none,” Raske said.

Half of hospitals in the state are already struggling to break even, Raske said. When the federal changes are implemented, that will be the case with every hospital across the board, he said.

There are “a number of changes” to which that loss can be attributed. Among them are the changes in eligibility for Medicaid, like stricter work requirements, that the state projects could result in 1.5 million enrollees losing coverage.

There’s also the Essential Plan, a publicly subsidized health care option for people who earn too much to qualify for Medicaid but too little to easily afford commercial insurance.

The federal law makes noncitizens no longer eligible for the Essential Plan, which means the state will lose the federal funding that came with those enrollees. Without that funding, the state has said it can’t afford to continue the plan.

New York has since received partial federal approval to end the Essential Plan and revive a stricter subsidized health care option called the Basic Health Plan.

That plan has a lower income eligibility cap, which means fewer people will be able to use it. The noncitizens who were on the Essential Plan also won’t be able to use it.

That will result, according to the state, in 450,000 fewer people who can sign up for the subsidized health care option. That means they won’t have health insurance unless they can afford to purchase a commercial plan.

People without health insurance are less likely to seek out health care. But even if they do, they’re also less likely to be able to afford it, landing them in medical debt.

That all means less revenue for health care institutions, including hospitals. That’s part of the $8.5 billion, Raske said.

Another significant shift is the shortened timeline of the state’s tax on managed care organizations, which will be terminated at the end of this year.

Gov. Kathy Hochul is proposing to use $750 million revenue from that tax — doubled to $1.5 billion with a federal funding match — to provide extra support to health care institutions, including hospitals and nursing homes.

But the language in her executive budget proposal doesn’t specify how that funding would be divided between health care institutions.

“We have had really productive discussions with the executive branch,” Raske said. “Her budget that came out really reflected what we call a great foundation to build upon to help cushion the impact in the upcoming years.”