Many New Yorkers can’t wait for the summer as we get near-freezing temperatures lingering into late April, but for some 470,000 people around the state, the approach of July is a frightening prospect. That’s when they’ll lose health insurance coverage under the state’s Essential Plan as changes made by President Donald Trump’s tax cuts ripple through the system, unless Albany legislators can find a fix or convince Gov. Kathy Hochul to change her plans for dealing with the situation.
That’s because the changes likely to strip people of coverage are technically as a result of state action. Specifically, Hochul has requested and been granted federal approval to roll back its 2024 expansion of eligibility for the basic health plans (BHPs) that states are required to offer under the Affordable Care Act, otherwise known as Obamacare.
This is going to get technical, but bear with me. Under Obamacare, states had to create health insurance exchanges that offered coverage for people who didn’t get it through their employer or government programs like Medicaid or Medicare. Those offerings had to include a highly affordable BHP – one with no premiums or deductibles – available to people with incomes up to 200% of the federal poverty level, a figure that works out to around $32,000 for an individual.
New York launched its BHP in 2015, which it branded the Essential Plan. Then in 2024, the state exercised an option allowed under the Affordable Care Act to make its BHP more available, by raising eligibility to 250% of the poverty level. A side benefit was that because the federal funding formula for BHPs tends to create a surplus for states, New York was able to use the funds generated by the expansion to raise reimbursement rates for medical providers for services provided under the Essential Plan. Those reimbursements went from 125% of Medicaid rates to as high as 225%. Basically, because Medicaid reimbursement rates were so low for doctors and providers generally, the state was paying them higher rates for treating people covered by the Essential Plan in part to help address provider reluctance to provide services for low rates. The expanded BHP was chugging along as planned – until Trump and the GOP congressional majorities enacted the so-called One Big Beautiful Bill (OBBB), a package of tax cuts tilted toward the wealthy.
Strictly speaking, the OBBB will not in itself kick these New Yorkers off the Essential Plan. Their coverage is imperiled by the way the law cuts federal healthcare funding for large groups of immigrants. Contrary to MAGA fantasies, undocumented immigrants are not eligible for or receiving any federally funded insurance, but a lot of immigrants with lawful status are. What the OBBB does is phase out federal funds for pretty much all noncitizens other than legal permanent residents, which includes, among others, those with Temporary Protected Status, DACA recipients, long-term work visa holders and active applicants for asylum.
The Essential Plan was very popular among these classes of immigrants, many of whom don’t qualify for Medicaid. As a result, over 600,000 BHP enrollees — some 40% out a total of 1.5 million — could lose federal funding support. That’s bad for them, but it’s also bad for the state, because what the BBB does is strip funding, not eligibility. The upshot is the state could end up with the same number of people being covered under the BHP but with only some 60% of the federal funds it had been getting, leaving it on the hook for billions a year.
So, Hochul went to the federal government for permission to return the Essential Plan to the original BHP eligibility ceiling of 200% of the poverty level. That snapback would knock off the BHP rolls of roughly half a million New Yorkers who have incomes in the range of 200-250% of the poverty level, the ones who benefited from that 2024 expansion of the program. This would let the state duck a huge expense. Returning to the original BHP eligibility would also unlock a trust fund of almost $9 billion that the state had accrued under the original BHP as it was run between 2015 and 2024. That money could help replace some of the funds that the federal government is taking away.
I want to be clear here that the half million New Yorkers being kicked off the Essential Plan are not exclusively immigrants; some large percentage probably are, but the cutoff is based on income, not status. Yet it’s important to remember that this is all happening because Trump and Republicans in Congress actively chose to pull health funding for legal immigrants while also slashing and constraining Medicaid and other insurance programs, forcing states like New York to make these kinds of choices. I see this as a MAGA version of closing public pools rather than racially integrating them, a phenomenon that left communities around the country without any public pools, even for White people, in the years after Brown v. Board of Ed. The Republicans are taking a social good away from everyone so that certain people can’t have it.
All that said, that still leaves the state with this problem of having 450,000 people on the verge of losing their health insurance (higher if you include people kicked off other federally funded insurance programs). I think that’s intrinsically bad, but also a poor long-term financial choice for the state given all the research that shows how being uninsured hampers economic stability, allows chronic conditions to fester and costs us in emergency room visits anyway.
The Community Service Society has put out a relatively straightforward series of proposals to try to keep everyone insured, including lowering reimbursement rates — not something that will be popular among hospitals — and creating a “bridge” program for the people being kicked off of the EP that would potentially have some modest premiums, but ones that’d still be lower than the silver-tier plans offered in the state ACA marketplace. CSS estimates that the implementation of its proposals could keep about 480,000 people insured for “as little as $2.3 billion a year,” not chump change but a lot less than the state would spend to keep the EP status quo as federal funds are pulled.
This plan has now been championed by some Albany legislators as a fix worth considering to avoid the more catastrophic consequence of so many people being kicked off the Essential Plan, which might lead many of them to eschew insurance altogether. So far, though, Hochul has not committed to supporting this or any other specific effort to avoid the mass loss of insurance. She’s spent more time pointing out how Trump and GOP lawmakers engineered this problem. That’s certainly fair, but it doesn’t address the issue or its ramifications, including the clock that’s ticking toward July.
