Hochul administration says federal cuts will force it to drop 450,000 from state's 'Essential' health plan

ALBANY — The Hochul administration says it will scale back a health insurance plan for lower-income residents due to federal spending cuts under the Trump administration.

Under a budget approved in July, the federal government is reducing about $7.5 billion in funding for what’s known as New York’s "Essential Plan," an insurance plan that has about 1.7 million enrollees.

In response, Gov. Kathy Hochul says the state will change income eligibility thresholds — which will result in about 450,000 people being dropped from the Essential Plan. This includes an estimated 70,000 on Long Island.

The remaining 1.3 million will be converting to New York’s "Basic Plan," to guarantee coverage.

The changes will take effect in mid-2026, according to the state Health Department. Meanwhile, Hochul and Democrats are pressuring New York Republicans to get the Trump administration to delay the health care cuts by at least three years.

"If Republicans give a damn about protecting health care for their constituents, they can act right now to pass a three-year delay of (federal budget) cuts to health care eligibility and keep every New Yorker on the Essential Plan covered," Hochul said in a statement.

New York’s seven Republicans in Congress, prior to the passage of the federal budget, had urged a three-year delay, though it wasn't included in the legislation.

The state runs the Essential Plan, though insurance is provided through private companies. New York obtained a waiver from then-President Joe Biden’s administration to fund and expand the Essential Plan through 2029. 

Among its key provisions for enrollees: No premiums, no deductibles. It saves them an estimated $6,100 annually compared with commercial insurance coverage, according to the Hochul administration.

Under the waiver, New York allowed enrollment for those whose income is less than 250% of the federal poverty level. For example, a single person earning about $39,000 annually or a family of four at $80,000, according to the state Health Department.

Importantly, the Essential Plan was almost fully funded by the federal government, saving the state money.

Without the waiver, New York will shift coverage thresholds back to those in the Basic Plan: 200% of the federal poverty level or about $31,300 for a single person; $64,300 for a family of four.

The program has been open to state residents and "legally present" immigrants such as those with green cards or student visitor visas. They may not qualify for Medicaid or have employer-offered insurance.

The state must publish the proposed eligibility changes for public comment through Oct. 10. If enacted, the changes take effect in July.

Those bumped from the Essential Plan will have to turn to the market to obtain insurance, most likely through Obamacare, or the Affordable Care Act, which provides a subsidized insurance market, said Bill Hammond, a health-policy analyst with the conservative Empire Center think tank. That coverage would, unlike the Essential Plan, likely come with deductibles and premiums.

By Yancey Roy

yancey.roy@newsday.com@yanceyroy