Changes to New York City’s Health Coverage

In July, nearly 500,000 New Yorkers will be taken off the Essential Plan health insurance program, which is funded by the city. Surprisingly, this has been described as positive news by Gov. Cathy Hochul’s office.

The expected loss of coverage is tied to funding adjustments made in President Trump’s major domestic policy bill, which was passed by a Republican-led Congress the previous year. However, Hochul’s office notes it could have been much worse. Without their intervention, even more people might have lost their coverage.

Hochul mentioned that they secured approval from the Trump administration to implement a plan aimed at reducing the number of people who lose their coverage under the Essential Plan. Currently, about 1.3 million out of 1.7 million enrollees will maintain their insurance.

“Even if Washington can’t keep up, I will do everything to protect my family, strengthen our health care system, and ensure all New Yorkers can access the care they need,” Hochul emphasized in a statement.

This approval was obtained following a meeting with Dr. Mehmet Oz of the U.S. Centers for Medicare and Medicaid Services.

The Essential Plan provides free insurance to those who earn too much for Medicaid but still struggle to afford options through the Affordable Care Act marketplace. These marketplace plans can be quite costly—often running into hundreds of dollars monthly, even with federal assistance—and generally come with higher out-of-pocket expenses.

Nonetheless, the program faces a significant $7.5 billion cut from federal funding, which state officials say is about half of the total funding. This reduction arises from the decision not to cover certain legally residing immigrants, who represent roughly 43% of Essential Plan participants.

Hochul received the green light to tackle these funding cuts by re-establishing an earlier version of the Essential Plan with lower income limits. This would mean individuals earning around $32,000 could qualify, as opposed to the previous threshold of $40,000. This change would allow access to a trust fund to help mitigate the federal funding losses temporarily.

Despite these measures, approximately 460,000 New Yorkers will lose their coverage because they will no longer meet the new income criteria. The state Department of Health plans to notify those affected 90 days ahead of the changes coming in July.

Earlier this year, Hochul indicated a “worst-case scenario” which involved completely eliminating the Essential Plan. In such a situation, more than a million members would lose their coverage. Fortunately, her current proposal aims to transition around 500,000 enrollees to a state-only funded Medicaid version, which would cost about $2 billion annually.

While New York has sidestepped the worst-case outcome, some advocates are urging Hochul and the state Legislature to allocate sufficient funds in the state budget to protect coverage for all Essential Plan members.

Cadence Acquaviva, a spokeswoman for the state Department of Health, noted on Friday that discussions are ongoing about alternative coverage for those losing eligibility due to the federal changes.

The Community Service Association of New York, a nonprofit focused on healthcare advocacy, estimated that it would cost the state around $2.3 billion annually to maintain coverage for all at-risk individuals.

“New York has a strong history of addressing coverage gaps created by the federal government,” said Elizabeth Benjamin, vice president of health initiatives at the Community Services Association.

Hochul’s office has not yet responded regarding any additional funding for the budget, which is due April 1, but during a news conference in Albany, she mentioned talks with the Trump administration about maintaining the current income limits for the Essential Plan.