More on this to follow.  Just sharing the news.

Hochul to undo New York’s Essential Plan expansion

NEW YORK — Gov. Kathy Hochul is undoing a recent expansion of federally funded health coverage for low-income New Yorkers, jeopardizing insurance for nearly half a million residents, in a move she blamed on President Donald Trump’s One Big Beautiful Bill Act.

Hochul announced a plan Wednesday to suspend the state’s Essential Plan, which provides low-cost coverage to nearly 1.7 million low-income New Yorkers through the Affordable Care Act, and revert the program to its original design.

State health officials say the change will enable them to continue covering 1.3 million of those people, including about 500,000 lawfully present non-citizens who will lose Essential Plan coverage under Trump’s tax and spending package. The state would have otherwise had to pay for Medicaid coverage for that population, POLITICO Pro previously reported.But Hochul’s move comes at the expense of 450,000 New Yorkers who became eligible for the Essential Plan last year, after the state expanded coverage to residents earning as much as 250 percent of the federal poverty line, up from 200 percent.

“I have been very direct and clear with New Yorkers about the disastrous impact of H.R.1 on our health care system, and the devastating choices it would force states to make,” State Health Commissioner James McDonald said in a statement. “Even with these steps, too many New Yorkers — nearly half a million — will lose affordable health coverage and be forced to choose between keeping food on the table and paying their medical bills.”

The transition is expected to take effect by July 1, 2026.

Background: The Essential Plan started as a Section 1331 basic health program under the Affordable Care Act, providing low- or no-cost coverage to New Yorkers who are low-income but earn too much to qualify for Medicaid. New York is one of just three states — Minnesota and Oregon are the others — that implemented basic health programs, which are federally funded plans for individuals who could otherwise purchase subsidized insurance through their state’s ACA marketplace.

In 2024, New York converted the Essential Plan into a Section 1332 ACA waiver program so the state could expand eligibility to residents earning as much as 250 percent of the federal poverty line. By then, the state’s basic health program had accumulated a $10 billion surplus through a quirk in its federal funding formula. Those billions of dollars have been essentially stuck in a lockbox since the Essential Plan’s conversion.

By converting the Essential Plan back into a basic health program, the state could regain access to those funds, according to Michael Kinnucan, health policy director for the Fiscal Policy Institute, a nonpartisan think tank.

And the governor seemingly has support from the Legislature. Senate Majority Leader Andrea Stewart-Cousins said she supports Hochul’s action because it will safeguard coverage for New Yorkers.“It is crucial to recognize that these cuts are not accidental,” Stewart-Cousins said in a statement. “They are a deliberate strategy employed by the Republican Party to reverse progress, dismantle affordable healthcare coverage, and force everyday New Yorkers to choose between paying their bills and seeking medical attention.”

Why it matters: The approach enables Hochul to avoid picking up a $3 billion-per-year tab to provide Medicaid coverage to the 500,000-some lawfully present immigrants who would lose Essential Plan coverage next year under the One Big Beautiful Bill Act. The law nixes certain immigrants’ eligibility for federal insurance subsidies, effectively slashing the Essential Plan’s annual funding in half.

The state appears to be eyeing the basic health program surplus to fund continued coverage for that population. In a statement, Hochul said the Essential Plan conversion allows the state “to access emergency funds that would otherwise not be available.”

The conversion also blunts the financial impact of the One Big Beautiful Bill Act on New York’s hospital industry because the Essential Plan pays higher reimbursement rates than Medicaid. The Greater New York Hospital Association estimates it will avert a $1.3 billion annual hit on hospital revenues.Kenneth Raske, president of the Greater New York Hospital Association, suggested Hochul’s approach was prudent in a conversation with Axios, which first reported the Essential Plan change.But, first, the federal government has to greenlight the switchup — which could put a wrinkle in Hochul’s plans.What’s next: The state kicked off a 30-day public comment period Wednesday on the proposed transition, which must be approved by the Centers for Medicare and Medicaid Services.Impacted individuals will receive a 90-day notice before any changes to coverage go into effect. The state said it will provide a special enrollment period and assistance to help with the transition.