Gov. Hochul said that she had no choice from a hostile federal government and had to change the state’s Essential Plan health coverage and thus potentially remove nearly a half-million New Yorkers from this zero-premium plan. The request to alter the program received preliminary approval from Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services.
But there are ways to lessen the impact that Hochul must pursue.
The underlying mechanics are a bit complicated, but very basically, despite the fact that Donald Trump and his MAGA legislators constantly proclaimed that last year’s One Big Beautiful Bill would kick tons of undocumented immigrants off of federally-funded health insurance, these immigrants were already uniformly ineligible for these benefits from Uncle Sam.
Instead, the legislation phases out federal funds for all manner of lawfully present immigrants, who will not necessarily become ineligible for state-run programs like the Essential Plan, but for whom the state will no longer receive reimbursement.
That’s a problem given that hundreds of thousands of the roughly 1.7 million New Yorkers using the Essential Plan would continue to cost the same amount to insure but no longer bring in federal cash in a way that would quickly deplete the nearly $9 billion in the plan’s dedicated trust fund.
So Hochul has made the hard decision to shrink the income eligibility for the Essential Plan to the federal basic plan’s default of 200% of the federal poverty level, kicking some 470,000 people off the rolls in an effort to maintain coverage for the remainder.
At first blush, this seems like a difficult but reasonable decision to maintain the program’s solvency, but there are some issues, chief among them that the state seems to be basing its projections on a medical provider reimbursement rate of 220% of Medicaid reimbursements, far higher than the 125% it had for the plan’s first several years.
Some of that seems to have been an effort to shore up the money that providers like hospitals were already losing from Medicaid cuts, but given the situation, the state should reconsider. With a lower reimbursement rate for Essential Plan (closer to the standard Medicaid rate), it could stretch the trust fund’s existing surplus — combined with the revenues from the citizens and immigrants who remain eligible for federal funds — far longer.
If Albany does move to make hundreds of thousands of New Yorkers ineligible for their existing Essential Plan health coverage, it should have some sort of plan B for them.
Yes, many would still manage to be eligible for subsidized coverage through the state’s health care exchange, but they’d be asked to pay out-of-pocket for worse coverage, which means at the very least the state can help provide some runway and navigation to head off the worst-case scenario, which is that some number of formerly-covered New Yorkers forgo insurance altogether, something that can have long-term health impacts that we all end up paying for anyway.
Researchers at the Community Service Society and elsewhere have already sketched out some possible plans forward to help more people stay covered.
While Albany can do a much better job managing a bad hand (and managing state’s bloated Medicaid program) let’s also not lose sight of who dealt the cards in this game: Trump and the GOP majority in Washington.