New York's budget gap widens to $27.5 billion as 450,000 lose health coverage

New York State's spending is outgrowing its revenue, and the federal government just pulled one of the props out.▸ In a report on Governor Hochul's SFY 2027 Executive Budget, released February 18, 2026, State Comptroller Thomas P. DiNapoli's office projects a cumulative General Fund gap of $27.5 billion through state fiscal year 2030 — and finds that the single largest swing in the state's finances is a federal retreat from health coverage. Federal funding for New York's Essential Plan, which insures low-income residents who earn too much for Medicaid, is projected to fall from $14.6 billion to $3.7 billion in one year. The state's own response to that cut, laid out in an April 2026 notice from NY State of Health, ends Essential Plan eligibility for 450,000 New Yorkers on July 1, 2026 — the same 450,000 figure the comptroller's office had already flagged, citing the state Division of the Budget, as the expected toll back in February.

New York still draws more of its budget from the federal government than from any other source apart from state taxes — $84.4 billion projected for SFY 2027, a $9.4 billion, 10.0 percent drop from SFY 2026's $93.8 billion.▸ Medicaid still dominates that flow, and is actually projected to grow, from $58.4 billion to $61.4 billion in federal funds. The Essential Plan tells the opposite story. It was the second-largest category of federal aid to New York as recently as SFY 2026, at $14.6 billion. Public Law 119-21 — the federal reconciliation act that restricted premium tax credits for the program — cuts that to $3.7 billion in SFY 2027 and to $390 million a year by SFY 2028, effectively winding the program down to a fraction of its former size.

The comptroller's office doesn't project a single-year shortfall — it projects one that compounds.▸ The state's Division of the Budget puts the General Fund gap at $6.0 billion in SFY 2028, $9.0 billion in SFY 2029, and $12.5 billion in SFY 2030, more than doubling in two years and summing to the $27.5 billion cumulative figure above. The comptroller attributes the trend to spending growing several times faster than revenue: over the same period, General Fund disbursements are projected to grow 18.5 percent while receipts grow only 9.8 percent, with Medicaid and school aid as the two largest drivers of that spending growth.

The people losing coverage are not abstract to that math.▸ New York's own Division of the Budget estimated that reverting the Essential Plan's income cutoff from 250 percent of the federal poverty level to 200 percent would mean 450,000 fewer New Yorkers qualify for the program. NY State of Health confirmed that outcome in April: enrollees earning between $31,920 and $39,900 a year lose Essential Plan eligibility on July 1, 2026, and are directed instead to marketplace Qualified Health Plans, where the average silver plan costs $220 a month after tax credits — a new, recurring cost the Essential Plan didn't charge.

Figures describe New York State's General Fund and federal funds projections as of the SFY 2027 Executive Budget financial plan; DOB projections are estimates and can change with subsequent quarterly updates, final budget agreements, or federal action on New York's pending waiver request.