New York is working to address a significant challenge affecting over 400,000 low- and moderate-income residents who may lose health insurance coverage due to federal funding cuts. These cuts were enacted under the One Big Beautiful Bill Act, signed into law by former President Donald Trump in 2023. The state’s Essential Plan, a no-cost insurance option created through the Affordable Care Act in 2016, is at the heart of this issue.
The Essential Plan was designed for New Yorkers aged 19 to 64 who do not have access to employer-sponsored health coverage and earn too much to qualify for Medicaid. Prior to the recent funding cuts, more than 1.7 million individuals were enrolled in the program, which had been expanded to cover those earning up to 250% of the federal poverty level in 2024. This expansion allowed many more New Yorkers—especially lawfully present immigrants—to access affordable health care.
Funding Cuts and Impacts on Coverage
The $7.5 billion annual funding reduction poses a serious threat to the Essential Plan. A provision in the new law prevents federal funds from covering health insurance for most lawfully present immigrants, leading to a potential loss of coverage for many. New York has historically provided health insurance to low-income immigrants due to a 2001 Court of Appeals ruling affirming the state’s constitutional obligation to do so.
According to an analysis by the Empire Center, more than 700,000 immigrants currently rely on the Essential Plan. The federal funding cuts come at a time when the state is exploring options to maintain coverage for as many residents as possible. In September 2023, Governor Kathy Hochul directed the state’s Department of Health to propose a plan to the Centers for Medicare and Medicaid Services (CMS) that would revert the Essential Plan’s income limit back to 200% of the federal poverty level.
This strategic move could allow the state to utilize a nearly $10 billion surplus generated by a clause within the Affordable Care Act. This clause permits states to collect 95% of tax credits intended for individuals in “Medicaid-like programs.” If approved, the plan could preserve health care for an estimated 1.3 million New Yorkers, yet it would leave approximately 450,000 without coverage.
Next Steps and Ongoing Dialogue
The state submitted its application to CMS, requesting a decision before the funding cuts took effect on January 1, 2024. However, the proposal remains under review, with delays attributed to last year’s government shutdown. Marissa Crary, a spokesperson for the Department of Health, emphasized that no changes to the Essential Plan will take place until the plan receives approval. She stated, “We will continue to work with CMS on developing affordable coverage options for impacted New Yorkers and smoothing the transition for consumers losing EP coverage.”
As New York grapples with the impending changes, the broader health care landscape remains tumultuous. The expiration of enhanced tax credits that reduced insurance costs for millions across the country has led to declining enrollment figures. Congress is currently divided on whether to extend these credits, adding another layer of uncertainty to health care access.
The Essential Plan’s future hangs in the balance as New York seeks to navigate federal restrictions while ensuring that its residents retain access to vital health care services. Thousands in the Capital Region, including 5,401 in Albany County and 3,906 in Schenectady County, have benefited from this safety net, underscoring the importance of timely resolution to these funding challenges.
