The Big Apple dropped a record $10.3 billion on healthcare last year — mostly for its own government workers — helping New York earn the dubious distinction of spending more on the services than any state except Alaska.
The finding was quietly reported in a city Health Department review on medical costsand spending.
The analysis stated that the cost of care is a major stressor on the city budget, which provides medical coverage for 1.2 million municipal workers and retirees.
“High and rising health care spending continues to outpace inflation and wages, generating growing opportunity costs for individuals, businesses, and governments. New York State has the second-highest per capita health care spending, after Alaska,” the report says.
The study suggested the city is limited in what it can do to rein in costs and bolster accountability because private insurers and not-for-profit hospitals are largely regulated by the state and federal governments.
The sweeping analysis said prices, rather than patient use, is the primary driver of rising health care spending.
Outpatient spending at hospital-run facilities was cited as a major cost driver in the study.
“The City spent $10.03B [billion] on employee/retiree premiums in FY25, up 15% since FY23,” the report said.
It found:
- Combined city premium spending through its insurers GHI Comprehensive Benefit Plan and HIP-HMO & Other Plans for active employees and pre-Medicare retirees rose from $8.7 billion in fiscal year 2023 to $9.34 billion for FY24, a 7.4% increase, to $10.03 billion in fiscal year 2025, a 7.3% increase, for a cumulative increase of 15.3% over the two-year period.
- City spending for Medicare-eligible retirees rose from $539.5 million in fiscal year 2023 to $571.5 million in FY24, up 5.9%, and $643.1 million in FY25, a jump of 12.5%, for a cumulative increase of 19.2% over the two-year period.
- Outpatient services/care were the biggest driver of the spike in spending for city workforce plans, increasing 13% for the GHI CBP and 17% for the HIP HMO from 2024 to 2025.
- Emergency-department visits accounted for the largest share of outpatient spending.
- New York State of Health Marketplace private plans for individuals in the city, created through ObamaCare/the Affordable Care Act, averaged $909 per month in 2025, a 19.7% increase over 2 years from 2023.
“As one of the nation’s largest public purchasers of health care, the City has a substantial interest in understanding the factors driving health care costs and affordability challenges,” the Health Department said in its report.
Healthcare affordability remains one of the most pressing challenges straining New Yorkers’ pocketbooks as they face rising premiums, deductibles, copayments, and higher prescription drug costs, the report said.
Amid the higher medical costs, patients face narrower provider networks, stingy prior authorization requirements for medical services and coverage denials that create “additional barriers to timely care,” it said.
The report said Mayor Zohran Mamdani considers the cost of healthcare a key issue to address in his affordability agenda.
“Health care costs rank among the largest household expenses nationally, and in New York City, where the overall cost of living is already exceptionally high, they compound existing economic pressures and undermine the financial security of working families,” the study said.
“The impacts fall hardest on low-income New Yorkers, communities of color, people with chronic conditions, and those enrolled in public insurance programs.”
New York’s healthcare system struggles with workforce shortages, hospitals’ financial instability and labor disputes evidenced by nurses’ union strikes and concerns about staffing levels and patient safety.
“These developments have occurred alongside continued increases in health care costs for consumers, employers, and government purchasers,” the report said.
“While health care costs are often blamed on utilization factors, such as an aging population or the impact of the COVID-19 pandemic, research consistently points to price as the main cause,” the study said.
“Health care prices behave differently than prices for other services, rarely corresponding to the actual cost or quality of care or the resulting outcomes.”
For example, the cost of the same procedure at different hospitals in the same market can vary widely in price.
The Healthcare Accountability and Consumer Protection Act of 2023 requires the city government to issue an annual report on medical costs via insurance and medical providers such as hospitals.
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