Thousands in D.C. could lose health coverage under budget plan

D.C. leaders are weighing some of the most sweeping changes to the city’s public health coverage in years — changes that could disrupt or eliminate coverage for thousands of low-income residents and undocumented immigrants.

As part of her fiscal 2026 budget, Mayor Muriel Bowser has put forward a plan to roll back Medicaid eligibility and phase out adult coverage in the city’s Healthcare Alliance Program, which provides health benefits regardless of immigration status.

City officials argue the changes are necessary to manage soaring healthcare costs and close a growing budget gap. Without action, Medicaid spending alone is projected to outpace revenue growth by hundreds of millions of dollars over the next four years, according to the mayor’s office.

“We simply cannot sustain higher costs with less money to pay for those costs,” Deputy Mayor for Health and Human Services Wayne Turnage told The 51st.

But the decision to phase out adult Alliance coverage is not driven by fiscal pressures alone. At-Large Councilmember Christina Henderson, who chairs the Council’s health committee, said the move also reflects concerns about potential new penalties from Congress. House Republicans are currently advancing the “One Big, Beautiful Bill,” which would punish states that use local funds to provide health coverage for undocumented immigrants by slashing Medicaid reimbursements.

“We are being faced right now with some very tough decisions,” Henderson told The 51st. “In the health space, we are very uniquely tied to what is happening on the federal side of things.”

Advocates, meanwhile, fear the cuts would leave thousands of residents at risk of losing or disrupting their health coverage and weaken a public health safety net D.C. has spent years building.

Here’s what we know so far. 

The proposed changes to the city’s health safety net  

Under Bowser’s plan, about 25,000 of the more than 272,000 D.C. residents currently enrolled in Medicaid would lose eligibility due to revised income limits. In its place, the city would create a Basic Health Program (BHP), a type of low-cost public insurance designed to fill the gap for people who earn too much to qualify for Medicaid but still struggle to afford private insurance.

Deputy Mayor for Health and Human Services Wayne Turnage says the program is intended to offer similar benefits to Medicaid, including emergency care, maternity services, prescription drugs, mental health treatment, and other core services, with little to no out-of-pocket costs, though the exact details of the plan have yet to be finalized. The plan would operate through the D.C. Health Benefit Exchange Authority, which already runs the city’s insurance marketplace.

Bowser is also targeting the city’s Healthcare Alliance Program, which was established in 2001 after the closure of D.C. General Hospital and currently covers about 27,000 residents who are ineligible for Medicaid or Medicare.

If passed, the plan would halt new adult enrollment in Alliance and impose restrictions in October that would cause about 3,000 residents to lose coverage, according to a spokesperson for the Department of Health Care Finance. For those remaining, income limits would tighten over the next two years until adult coverage is eliminated entirely by fiscal 2028. In the interim, benefits would be scaled back to primary care, hospital services, emergency transportation, and prescriptions, with in-person recertification required every six months.

The proposal would also eliminate the Immigrant Children’s Program, which covers roughly 6,000 children under 21 who are not eligible for Medicaid, and move them to Alliance (which doesn’t offer the same level of coverage).  

No alternative has been proposed for adults losing Alliance coverage, meaning many are likely to become uninsured.

Why lawmakers say the cuts are necessary

City officials argue the changes to both programs are needed to manage rising healthcare costs. Without intervention, Medicaid spending is projected to create a $580 million shortfall over the next four years, according to Turnage. He said the District is targeting reductions among “optional” Medicaid populations — namely, higher-income enrollees — to control costs. Those losing Medicaid eligibility would be shifted to the new Basic Health Program.

“The most important fact is we’re not cutting them loose from care,” Turnage said during last week’s budget rollout. 

The transition is much starker for the 27,000 Alliance enrollees over 21. Because the BHP requires legal status, many beneficiaries, who are mostly undocumented or are waiting to receive legal status, would not qualify, according to a city official who spoke on background.

The city estimates that rolling back eligibility for Medicaid and the Alliance program, as well as moving beneficiaries in the Immigration Children’s program, will save D.C. roughly $172.8 million in fiscal 2026, according to a Health Care Finance report presented at the Medical Care Advisory Committee meeting in June and shared with The 51st.

In addition to rising healthcare costs, the District is contending with broader budget pressures driven by the shrinking federal workforce. In February, D.C.’s chief financial officer projected that the city’s economy will shrink by 1.9% in the next fiscal year.  

Bowser’s proposed budget — pitched as a “Grow D.C.” plan — prioritizes economic development and commercial revitalization to boost future revenues, including major investments in housing, entertainment, and business incentives. But to help pay for those investments, the plan also proposes deep cuts to the social safety net, including reductions to food access and emergency assistance programs, in addition to healthcare.

Henderson said city officials began weighing adjustments to the city’s health programs earlier this year as they recognized the growing budget gap. But those financial realities are also colliding with federal politics, as lawmakers grew concerned that Congress could soon impose penalties on jurisdictions that fund health coverage for undocumented immigrants, potentially putting millions in federal Medicaid dollars at risk.

As that risk grew more tangible, Henderson said, the option of maintaining the Alliance program in its current form became increasingly difficult to defend from a budgetary and legal standpoint.

“For the District to try to continue to operate our Alliance program as though none of these federal changes are coming — or for those who would say, ‘We should just defy what the [federal government] is saying,’ and continue to operate — that is a $100 million hit to the District that, right now, we don't have,” Henderson said.

While some states, such as California, are moving to cap enrollment in similar programs in anticipation of possible federal penalties, Henderson said D.C. is taking a more gradual approach, phasing out Alliance coverage for adults over several years.

"I obviously have concerns about us getting rid of any program that has been providing coverage to folks who are here, but I think that there are multiple pieces that are at play,” Henderson said. “I know that folks like to pretend that we can act in a vacuum, but we can't.”

What advocates and healthcare providers have to say

Healthcare providers warn the combined impact of shifting thousands of residents off Medicaid and phasing out adult Alliance coverage could create new barriers to care and place a greater financial strain on already stretched clinics.

“By narrowing eligibility and introducing administrative hurdles, the proposals could cause thousands of people to lose coverage and create new barriers to accessing primary care,” Ruth Pollard, CEO of the D.C. Primary Care Association, said over email. “At the same time, community health centers would face greater financial strain as they continue to serve patients regardless of insurance status, with fewer resources to support their work.”

Naseema Shafi, CEO of Whitman-Walker Health, noted that the proposed changes could disrupt continuity of care and prompt more people to delay care until an emergency.

“If people lose their health insurance, they’re more likely to skip regular checkups and preventive care, which can make chronic illnesses worse,” she said, adding that more uninsured patients could end up relying on emergency rooms for care, which is more expensive and less effective for managing long-term health.

For residents transitioning from Medicaid coverage to the Basic Health Program, Turnage said the goal is to minimize disruption and to keep safety-net providers, including federally qualified health centers, in-network. “Any time there is a change in Medicaid coverage, there is the potential for providers to be impacted,” Turnage’s office said in a statement. “Often, when Medicaid eligibility changes occur, there is no alternative coverage option and that’s when you see the greatest impact to the health care system. In this case, the District is establishing an alternative that can stave off increases in the number of uninsured residents.” 

But health advocates also fear that the new program may not match Medicaid’s scope.

Jennifer Lav, a senior attorney at the National Health Law Program, said that while D.C. could design a more comprehensive — and more expensive — Basic Health Program, a leaner version could leave residents without access to services like adult dental and vision care, rides to medical appointments, in-home care for people with serious disabilities, and specialized mental health treatment.

“So much of this depends on the choices that the District makes on how the BHP is designed,” Lav said. “But if this is being done to save money, it is important to note that the cost of a BHP depends on benefits offered, the cost of offering those benefits, and the subsidies provided by the federal government.”

Nikki Metzgar, director of communications and external affairs at the D.C. Fiscal Policy Institute, said the combined changes to Medicaid and Alliance will increase the number of uninsured people and drive up costs for families and healthcare providers.

“Right now, D.C. can take pride in the fact that almost every resident has access to health coverage and services, but these proposed changes threaten that,” she told The 51st.