New York Health Act Explained: Coverage, Funding, and Federal Hurdles

The New York Health Act is a proposed state law that would replace private health insurance in New York with a single publicly funded program, called New York Health, covering every resident with no premiums, deductibles, or copays at the point of care. It has not been enacted. The current version, Senate Bill S3425 and Assembly Bill A1466, sits in the Senate Health Committee for the 2025–2026 session and has not received a floor vote in either chamber.¹ Everything below describes what the bill proposes, not what New York law currently requires.

Who Would Be Covered

Every resident of New York would qualify, with residency defined as having your primary place of living in the state. Immigration status, age, income, and employment would not affect eligibility.¹

The bill also covers people who live outside New York but work full-time in the state, so cross-border commuters would not fall through a gap.¹

Once enrolled, members would pay nothing at the doctor’s office, the emergency room, or the pharmacy counter for covered services. The bill explicitly prohibits premiums, deductibles, co-payments, and co-insurance.¹ The cost shifts entirely to the tax system described further down.

What Care Would Be Covered

The benefits package works on a floor-not-ceiling principle. The program would have to cover every service currently required under Medicaid, Medicare, Child Health Plus, the Essential Plan, and commercial insurance regulated in New York. If any of those programs covers a treatment today, New York Health would have to cover it too, regardless of whether the individual member would personally have qualified for Medicare or Medicaid under current rules.¹

In practice, that means:

Primary and preventive care, including checkups, screenings, and immunizations
Hospital and emergency services
Prescription drugs and medical supplies
Mental health and substance use treatment
Dental, vision, and hearing services
Long-term care, including nursing facility care and home-based support
Reproductive care

Long-term care is one of the largest expansions. Billions of dollars in home care services go unpaid in New York each year, often delivered by family members without compensation. The program would make paid home care accessible to members who need it.²

If you need care while temporarily outside New York, the program would still cover it. The Trust Fund would either pay the out-of-state provider directly or reimburse you for what you paid. Members also enrolled in Medicare could still use their Original Medicare card while traveling.²

Because there are no insurance networks, members would choose their own doctors, hospitals, and specialists among any licensed New York providers. The Department of Health would pay providers directly through a unified payment system rather than the current patchwork of insurer billing.²

How It Would Be Paid For

The bill creates a New York Health Trust Fund as the single account for all program revenue. It draws from two new progressive taxes and, if federal approvals come through, redirected federal money.

The Payroll Tax

The first tax applies to wages and self-employment income. Rates would be progressively graduated, with higher brackets paying a higher percentage. For employees, employers would pay 80% of the tax and workers 20%, though employers can voluntarily cover more or all of the employee share. Self-employed people pay the full amount. The first $25,000 of income is exempt, and that exemption rises to $50,000 for people enrolled in Medicare.¹

The bill itself does not set the bracket percentages. It establishes the structure and directs the state to develop the specific rates. In its assessment of a prior version of the bill, the RAND Corporation modeled rates of roughly 6.2%, 12.4%, and 18.6% across income brackets to fully fund the program.³

The Non-Payroll Income Tax

A second tax hits income that isn’t wages: interest, dividends, and capital gains. That way, residents whose income comes mostly from investments contribute rather than pushing the entire cost onto wage earners. Like the payroll tax, this one is progressively graduated, and the first $25,000 of income is exempt.¹

Redirected Federal Funds

The bill directs the state to seek federal waivers so that money currently flowing into Medicare, Medicaid, Child Health Plus, the Essential Plan, and Affordable Care Act programs would go into the Trust Fund instead. The point is to pool all funding streams. If any waiver is denied, the bill instructs the state to run New York Health alongside those federal programs as seamlessly as possible, so members and providers experience one program even if federal money still moves through separate channels.¹

What It Would Cost, and Where the Savings Come From

RAND modeled the bill over ten years, from 2022 to 2031, and estimated that total health care spending in New York would be slightly lower under the program than under the status quo. The projection showed roughly a 1% decrease in total spending in the first year and a 3% decrease by the tenth year, for a cumulative net savings of about $80 billion out of $3.88 trillion in baseline spending.³

To fund the program, RAND estimated that new state tax collections would need to reach approximately $139 billion in the first year and $210 billion by the tenth.³ Those figures replace money already being spent, just through different channels: premiums paid by employers and workers, deductibles, and other out-of-pocket costs. The projected savings come mainly from reduced administrative overhead and negotiated drug prices.

One important caveat sits inside the RAND analysis. It assumed high-income earners would stay in New York. If a significant number left the state to avoid the new taxes, remaining taxpayers would face higher rates to close the gap.

What Happens to Private Insurance

The bill prohibits private insurers from selling coverage that duplicates any service offered under the program. If New York Health covers it, a private plan cannot.¹ The restriction is designed to prevent a two-tier system where wealthier residents pay for faster or better access to the same services.

Insurers could still sell supplemental policies for services outside the program’s benefits, similar to how Medigap plans work alongside Medicare, though the public program’s coverage is so broad that little room is left for supplemental products. Employer-sponsored plans would effectively end, because those plans mostly cover services New York Health would now provide. Employers would contribute through the payroll tax instead.²

What Happens to Medicare and Medicaid

The bill’s goal is to fold Medicare and Medicaid into New York Health so thoroughly that members never juggle separate programs. That requires federal waivers letting the state redirect Medicare and Medicaid dollars into the Trust Fund.¹

If the waivers are granted, care would come through New York Health, and the federal money would flow in the background. If they are denied, the bill has a fallback: Medicare-eligible members would be required to enroll in Medicare Parts A, B, and D as a condition of keeping their New York Health coverage. The state program would then sit on top of Medicare, covering everything Medicare misses. Enrolling in a federal program would not cause anyone to lose services under the state program.¹

The Federal Obstacles That Could Block It

Even if the legislature passes the bill and the governor signs it, two federal-level problems could delay or defeat implementation.

ERISA Preemption

The federal Employee Retirement Income Security Act prohibits states from passing laws that “relate to” employer-sponsored benefit plans, and courts have read that language broadly. Because the New York Health Act would effectively end employer health plans and replace them with a state-run system funded by a mandatory payroll tax, self-insured employers, who are fully shielded by ERISA from state insurance regulation, could challenge the law in federal court. The outcome is genuinely uncertain. Congress could fix the issue by amending ERISA to allow state single-payer programs, but no such amendment has been enacted or appears imminent.

Federal Waivers

Redirecting Medicare, Medicaid, and Affordable Care Act funds into the Trust Fund requires federal approval. For the ACA piece, the state would need a Section 1332 State Innovation Waiver, which the federal government can approve only if the alternative plan provides coverage at least as comprehensive and affordable as current coverage, covers at least as many people, and does not increase the federal deficit.⁴ Separate waivers would be required for Medicare and Medicaid. No state has ever obtained a Medicare waiver of this scope, and whether one could be secured depends heavily on which federal administration receives the request.

The bill acknowledges this risk. Its fallback provisions let the program operate alongside unreformed federal programs if waivers are denied, though that fragmented setup would sacrifice some of the administrative savings the single-payer design is meant to produce.¹

1
New York State Senate. Senate Bill S3425
2
New York State Senate. New York Health Act Brochure
3
RAND. An Assessment of the New York Health Act – A Single-Payer Option for New York State
4
Centers for Medicare & Medicaid Services. Section 1332 State Innovation Waivers