New York scales back health insurance program for low-income residents

ALBANY, N.Y. (NEXSTAR) — In response to losing $7.5 billion per year in federal funding, the state will end its expanded Essential Plan, a health insurance program that covers almost 1.7 million low- and middle-income New Yorkers. Democratic leaders in Governor Kathy Hochul’s administration announced on Wednesday that it will terminate the State Innovation Waiver, returning to a Basic Health Program.

Pending approval from the federal Centers for Medicare and Medicaid Services, the change is supposed to take effect by July 2026. The state Department of Health said they’re committed to an “orderly transition.”

The change comes as a result of the federal budget bill H.R.1—the One Big Beautiful Bill Act— that eliminated the funding for New York’s Essential Plan. The law changed the requirements for receiving federal tax credits for health insurance, which in turn eliminated a major source of funding for New York’s Essential Plan. DOH Commissioner Dr. James McDonald and NY State of Health Executive Director Danielle Holahan both used the word “terminate” when referring to the future of the Section 1332 State Innovation Waiver and the Essential Plan.

“Due to this funding cut from H.R.1, the State has no choice but to terminate its groundbreaking Section 1332 State Innovation Waiver and Essential Plan expansion,” McDonald said.

The Essential Plan expansion was a component of the state’s federal Section 1332 State Innovation Waiver, offering coverage to people with incomes up to 250% of the federal poverty level. Until this change, the annual thresholds were $39,125 annually for an individual or $52,875 for a two-person household, and they had no monthly premiums, deductibles, or copays.

Terminating the expansion reverts the program to its original scope as a Basic Health Program, offering coverage for those who make up to 200% of the poverty level. Falling back from the Basic Health Program is supposed to maintain health insurance for about 1.3 million of the 1.7 million who were covered, although the roughly 450,000 others left over will be kicked off.

“Our decision to terminate the waiver allows us to preserve coverage for as many New Yorkers as possible and protect more than a decade of progress in expanding healthcare,” Holahan said. She called the former plan “the linchpin to driving down New York’s uninsured rate among those who do not qualify for Medicaid but still struggle with health care costs.”

Governor Kathy Hochul, State Senate Majority Leader Andrea Stewart-Cousins, and Assembly Speaker Carl Heastie—all Democrats—blamed Republicans in Washington for passing the “Big Ugly Bill” that defunded the program. Hochul said she warned that the cuts would rip away medical care for needy New Yorkers—”Working moms and dads, families living paycheck to paycheck, people doing everything right and still struggling to get by”—and that the state “has no choice but to confront that reality.”

Stewart-Cousins said the represent 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.” She called the decision to revert to the Basic Health Program “appropriate.”

Heastie called losing the Essential Plan a “devastating blow to hard working New Yorkers brought on due to the draconian measures implemented by the federal government.” In a press release, he said the change will “affect every single New Yorker.”

Calling it the “Big Terrible Bill,” Heastie again name-checked Representatives Elise Stefanik, Mike Lawler, Nick LaLota, Nicole Malliotakis, Andrew Garbarino, Claudia Tenney, and Nick Langworthy, claiming they “voted to give their billionaire donors the gift of tax breaks and tax cuts.”

And according to Hochul’s office, 127,000 New Yorkers who live in districts represented by the seven New York Republican Members of Congress that voted for H.R.1 will lose coverage. She accused those congressmembers of “abandoning their own constituents.”

Hochul wants Congress to pass a three-year delay of the cuts. The governor also noted that many people on the Essential Plan work part-time, including at “big retailers and other companies that deliberately limit hours to avoid covering health care.” She called for employers to “stop passing the cost on to taxpayers and start providing coverage for their workers.”

A public comment period runs through October 10 for New Yorkers to weigh in on the plan to revert to the Basic Health Program. Comments can be emailed to NYSOH.team@health.ny.gov or mailed to the NY State of Health office in Albany:

Going forward, New York is supposed to give 90-days’ notice before any change in someone’s eligibility. The state also plans to offer a special enrollment period for CMS-approved coverage options and extra customer service assistance.