The New York City Health and Hospitals Corporation (HHC), a vital component of the health care safety net protecting lower income New Yorkers, faces two significant fiscal challenges in the coming years. First, HHC expects about $1.6 billion in annual revenues that have been available through special Medicaid supplementary payments will continue to flow in coming years, but, in fact, they may be in jeopardy.

Second, HHC’s expenses, notably for pensions and fringe benefits, have been growing more rapidly than its revenues, obliging its leaders to develop a plan to close projected gaps. The problem is that the current plan does not fully close the gaps and key elements may prove unrealistic. HHC President Alan Aviles recently acknowledged steeper expenditure reductions and layoffs may be necessary should the current plan fail to achieve savings goals.