Exact Impact Of Trump Subsidy Cuts Unclear In NY

Oct 17, 2017

The fallout continues from President Trump’s decision to end subsidies to health insurance companies to help lower income Americans pay for their health insurance. But it’s still unclear what the exact impact will be in New York.

As soon as the president followed through with his threat to end the subsidies, New York and several other states filed a lawsuit to try to get the money back. New York Attorney General Eric Schneiderman says it will sow dysfunction in the state’s and the nation’s health care system.

“He [Trump] said himself that he wanted to see Obamacare explode,” Schneiderman said on October 13.  “Well this is an effort to blow it up and we’re not going to let him do it." 

It’s not clear, though how exactly the end of the subsidies will affect New York.  That’s because New York uses them in a different way than most of the other states. Only New York and Minnesota used the subsidies to create their own programs to provide health coverage to people with too many assets to be eligible for Medicaid, but who do not earn enough to afford health care plans offered on the Affordable Care Act exchanges. In New York, that plan, which serves around 680,000 New Yorkers, is known as the Essential Plan.

The Greater New York Hospital Association’s Laura Alfredo, says the president’s decision to end the subsidies “undermines” the program, and could reverse progress the state has made in cutting the number of uninsured in half. 

“It will result in an $870 million hole in funding for the program,” Alfredo said. “Putting New York state in basically an untenable position of having to find the funds to make up for it.”

Bill Hammond, health policy analyst with the fiscal watchdog group The Empire Center, says on the surface, it seems like the Essential Plan is finished, without the federal subsidy.

“It might mean that the state has to cancel the whole program,” Hammond said.

But technically, he says, Trump’s order ends subsidies that went directly to the insurance companies. The order does not say anything about state created plans, and Hammond says they may be in a separate legal category.

“It’s not absolutely clear what’s going to happen,” Hammond said.

Governor Andrew Cuomo’s Medicaid Director, Jason Helgerson, also says it’s “unclear” what the exact effect of the subsidy cut will be on New York’s health programs.

In the meantime, Governor Cuomo has raised the idea of a special session in December to deal with the federal health care cuts. In addition to the end to the subsidies, there are other threats to the state’s health care budget. Congress failed to renew funds for public hospitals to pay for the state’s remaining uninsured. And the child Health Plus program, which provided care to poor children was also not renewed. Governor Cuomo has said that could cost the state billions of dollars.

“We still face the health care cuts and the health care proposals that would decimate the State of New York,” Cuomo said in Buffalo on Tuesday.

There’s still a chance, though, that Congress could act to continue some of the funding when the federal budget is finalized in December.

Hammond says state leaders could be in a difficult position, if they make budget decisions - like raising taxes or cutting programs - before they know what Congress and the president will do.

“The state would have wasted its time and possibly disrupted the coverage of people for no good reason,” he said.

If the Essential Plan does have to end, enrollees would not be left without any heath care. But they would have to purchase plans through the health plan exchange, and would have to pay significantly more money for premiums and health care.