New York’s Essential Plan could shut down this summer under Gov. Kathy Hochul’s proposed budget, according to a new analysis from The Empire Center for Public Policy that raises questions about the state’s financial assumptions and the future of health coverage for nearly 1.8 million people.
The report says Hochul’s budget hinges on whether the federal government agrees to keep paying for coverage for certain non-citizens who lost eligibility under a federal law passed last summer.
Hochul is seeking federal approval to temporarily continue Essential Plan coverage for about 525,000 legally present non-citizens. If Washington denies that request, the governor’s budget calls for ending the Essential Plan entirely in July, a move that would force enrollees to find other coverage options.
State officials have not previously said they were considering shutting down the program. Enrollment has continued, but the state’s newly released financial plan assumes the Essential Plan will end after June 30 and reduces funding accordingly.
The Empire Center report says that assumption explains why Hochul’s budget shows federal aid to the state dropping by $10.4 billion, or 11 percent, in fiscal 2027. It also shows total state spending growing by less than 1 percent, even as state-funded spending rises sharply.
The budget briefing book says the state “cannot afford” to keep running the Essential Plan as designed, but the report notes it does not include estimates to back up that claim. It also lacks details explaining a proposed overhaul that would lower income eligibility and remove about 450,000 people from the program.
Instead, the financial plan shows Essential Plan funding falling to $3.2 billion for the final three months of the fiscal year and dropping to zero after that. At the same time, Hochul’s formal budget legislation allocates $6.4 billion for the program, a figure that appears to assume federal approval of the state’s requested changes.
The report argues that citizens could face the biggest disruption. Under a court ruling, New York must continue covering many low-income immigrant enrollees even without federal aid, which would push them into Medicaid at an estimated cost of $3 billion a year to the state.
Citizen enrollees with higher incomes would likely have to move to private insurance or Affordable Care Act plans. Those plans require monthly premium contributions, sometimes exceeding $270, compared to the Essential Plan’s premium-free coverage.
The Empire Center analysis traces the issue to changes in federal law signed last summer that barred certain immigrants from ACA-related programs. State officials estimate that change will cut the Essential Plan’s revenue by $7.6 billion a year, more than half its funding.
The report says state leaders have not explained how they would close that gap or why they are unwilling to use strong tax revenues and reserves to keep the program running. It also warns that if the state plans to end coverage within months, enrollees deserve clearer notice and justification.
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