New York isn't stopping at 250% FPL: Offering CSR help up to 400% FPL is in the works as well?

Earlier today I noted that New York has officially implemented their expansion of the Essential Plan, their branding of the ACA-funded Basic Health Plan (BHP) program that currently covers 1.2 million New Yorkers, from residents earning under 200% of the Federal Poverty Level up to those earning as much as 250% FPL.

In doing so, around 100,000 additional people are now enrolled in the BHP program, with roughly 62,000 of them now saving an average $4,700/year versus the ACA exchange plans they were previously enrolled in, plus another ~32,000 who I presume are completely new to either program.

This program expansion is made possible thanks to a rather surreal funding surplus situation which the state has found themselves in over the past few years. As Bill Hammond of the Empire Center reported over a year ago:

The accumulated surplus of the state-run Essential Plan had ballooned to $9.9 billion by the end of December, putting it on track to break $10 billion before the close of the fiscal year on March 31, according to newly released records from the comptroller’s office.

...Due to a quirk in its funding formula, the program generates far more federal funding than it needs to pay expenses – resulting in an operating surplus that has grown to almost $3 billion per year.

This sounds fantastic, but there's one catch:

Federal law bars the state from diverting the money for any other purpose, causing a $9.9 billion cash balance to build up in the program’s trust fund.

Despite this snafu, the Hochul administration is seeking even more federal aid to finance an expansion of the program, which would lift the income eligibility threshold from 200 percent to 250 percent of the poverty level.

If the proposal is approved, the state projects that the program's annual surplus would get half a billion smaller – but the cash balance would continue to mount.

At the time, I posed a seemingly obvious question: If that's the case, why not expand it even further up the income ladder? But I immediately answered myself:

There's also the fact that the expanded federal subsidies included in the American Rescue Plan & extended in the Inflation Reduction Act are currently scheduled to end at the end of 2025. While the NY BHP program already had a large surplus prior to the ARP/IRA subsidy expansion, if that expansion isn't extended beyond 2025 the current surplus rate would presumably drop significantly, and there would also be a significant ripple effect on the individual market from that as well.

With that in mind, it makes sense not to blow all the surplus cash until they have a more solid idea of how much will be there in the future.

Having said that, this buried lede in a Politico Pulse article (thanks to Andrew Sprung for the catch!) about the just-enacted BHP expansion should raise some eyebrows:

To further increase affordability using those pass-through funds, New York plans to implement cost-sharing subsidies for enrollees in qualified health plans earning up to 400 percent of the federal poverty line starting next year, New York State of Health Executive Director Danielle Holahan said in an interview.

Whoa. That's another BFD if it actually happens. CSR assistance is generous for enrollees earning up to 200% FPL and nominal for those earning up to 250% FPL...all of which is irrelevant in New York due to the current BHP expansion.

I admit to being a bit confused here as Hammond seemed to be pretty clear that the windfall can only be used to expand the existing BHP program, not for anything else, which I assume would include a separate CSR subsidy program. my colleague Andrew Sprung pointed out, technically speaking, New York's BHP program is no longer officially a BHP program; it's a different program which mirrors the existing BHP program but which includes the expansion up to 250% FPL:

New York is currently operating a BHP under section 1331 of the ACA. On November 16, 2023, CMS published rulemaking (88 FR 78818) that updates the applicable BHP regulations to establish a framework for states to suspend their BHPs (e.g. BHP must be replaced with a coverage program that is at least comparable). New York submitted a request to suspend its existing BHP, contingent on approval of the section 1332 waiver application, for the duration of the waiver period and seamlessly transition that population to coverage under its new section 1332 waiver. New York’s BHP is referred to as the Essential Plan (EP). The State refers to its new coverage program under the section 1332 waiver as "the with-waiver EP," and the waiver program is referred to as the “EP Expansion” for purposes of this document. For the avoidance of doubt, the EP Expansion is being established pursuant to a section 1332 waiver and is therefore not a BHP subject to section 1331 of the ACA or its implementing regulations.

In other words, the old program for enrollees earning 138 - 200% FPL was a Section 1331 (BHP) program called "The Essential Plan."

The new program for enrollees earning 138 - 200% FPL is a Section 1332 program called "The With-Waiver Essential Plan" and for 200 - 250% FPL income is a Section 1332 program called "The EP Expansion."

This may sound like a lot of semantic nonsense, but it's possible that making all of these technical legal status changes may have freed up some of the BHP surplus money to be used for this new CSR program as well? Or perhaps I'm completely misunderstanding the situation.

I asked the author of the Politico piece, Maya Kaufman, about it and she said that it's her understanding that the CSR-to-400% announcement does not refer to the BHP program being expanded beyond 250% FPL, so I guess that's the situation?

In any event, during the 2024 Open Enrollment Period around 100,000 other New Yorkers earning between 250 - 400% FPL selected exchange QHPs, with ~34,000 selecting Silver plans, ~58,000 selecting Bronze and ~7,600 selecting Gold plans. According to KFF, the average deductible for a 2024 ACA Bronze plan is $7,258; for Silver it's $5,241; and for Gold it's $1,430...whereas it's just $737 for a CSR 87 plan and a mere $90 for CSR 94 plans.

I don't know exactly how generous New York plans on making this "CSR to 400%" program, but assuming it brings the entire 250 - 400% FPL range up to 87% Actuarial Value, it sounds like it would cost something like $536 million/year:

  • 58,000 x $6,521 = $378 million
  • 34,000 x $4,504 = $153 million
  • 7,600 x $693 = $5.3 million

Obviously that assumes all ~100K were to enroll in the exact same plans at the exact same premiums and unsubsidized deductibles they are today, which obviously wouldn't be the case, but it at least gives some idea of how much such a CSR program might cost the state.