Eric Schneiderman for Attorney General

“AG Schneiderman: In Defense of New York State’s ‘Essential Plan,’ We’re Suing the Trump Administration”

February 8, 2018

By New York State Attorney General Eric Schneiderman, as published by Health Affairs, on February 7, 2018.

Millions of New Yorkers rejoiced when Congressional Republicans appeared to drop their efforts to repeal Obamacare.

But, behind the scenes, the Trump administration and its allies never gave up their strategy to sabotage the law—and to undercut the significant gains in health care coverage New York and other states have achieved in the past six years.

In an abrupt and unjustified move to further sabotage Obamacare, the Trump administration declared in late 2017 that the federal government would slash federal funding for the Basic Health Program—a critical program that covers 700,000 low-income New Yorkers.

The Essential Plan

The program—called the “Essential Plan” in New York—provides low- or no-cost health care for New Yorkers making up to twice the poverty level. The program has been extraordinarily successful, playing a major role in the dramatic drop in New York’s uninsured rate from 10 percent to 5 percent since 2013.

New York’s Essential Plan arose directly out of a section of the Affordable Care Act (ACA) designed to encourage states to find new, efficient ways to provide care for low-income residents.

Under the ACA, states can apply to establish a Basic Health Program—like the Essential Plan in New York—to give consumers earning below 200% of the federal poverty level (about $49,000 for a family of four) even more affordable coverage than what is offered in state marketplaces. If the state’s application is approved, the law requires the federal government to pay 95 percent of the funds that would have been paid on behalf of enrollees toward premium subsidies and cost sharing reductions had they stayed in the state marketplace.

In New York, Essential Plan members pay between $0 and $20 for their monthly premiums and can purchase a health plan at any time during the year. This plan was established, in part, as a response to the fact that state health officials had found that the mere perception that insurance was unaffordable made the uninsured less likely to shop for a policy. Policy makers theorized that the low- or no-cost Essential Plan would help overcome those psychological barriers.

And we were right. Under the Essential Plan, enrollment among the lowest-income group of subsidy-eligible consumers surged—exactly as we had hoped.

In 2015, the federal Department of Health and Human Services (HHS) approved New York’s Essential Plan because it met all of the necessary requirements under the ACA and its regulations. Since then, we have received regular quarterly payments to sustain the vital program—that is, until late 2017, when HHS informed us that it would no longer pay nearly one-quarter of the funds it owed to the state under law.

While we find HHS’s decision arbitrary and capricious and contrary to the ACA’s requirements, we were willing to work with the agency to figure out a new payment calculation that was consistent with the federal government’s statutory reimbursement obligation and would protect our most vulnerable residents from losing their care.

To that end, we provided HHS with a reasonable, alternative funding formula—and they completely ignored it. They offered no explanation and failed to consider any compromise position. That is not how an agency interested in finding solutions should act.

Suing To Protect A Lifeline For Vulnerable Communities

The Essential Plan is a lifeline for vulnerable communities and is vital to ensuring healthy equity in New York.

The Trump administration’s sudden decision to cut more than $1 billion in annual federal funding is a cruel and reckless assault on New York’s families—and we will not allow it.

I won’t stand by as the federal government continues to renege on its most basic obligations in a transparent attempt to dismantle the ACA.

That is why I joined with Minnesota Attorney General Lori Swanson last month to sue the federal government to defend these vital funds and the quality, affordable health care they ensure.

In our suit, we argue that the ACA is very clear that, once the Essential Plan is approved, HHS must transfer funds to the states to support the program. HHS’s sudden decision to stop paying nearly one-quarter of those payments directly contravenes the ACA’s clear directive for how states must be reimbursed.

The Essential Plan has been instrumental in connecting many of the most vulnerable New Yorkers with truly affordable care. HHS’s decision to cut the legs out from under this program for purely partisan purposes is abhorrent—and we look forward to arguing our case in court.