A coalition of 20 Democratic attorneys general, along with Pennsylvania Governor Josh Shapiro, filed a federal lawsuit on Thursday seeking to block key portions of a new federal health rule they claim could strip health insurance from nearly 2 million Americans.
Filed in federal court in Massachusetts, the lawsuit targets provisions in a new rule from the Department of Health and Human Services (HHS) that is set to take effect next month.
The rule modifies how the Affordable Care Act (ACA) marketplaces function, and critics argue it will create steep enrollment barriers, raise out-of-pocket costs, and cause confusion during open enrollment.
The plaintiffs — including attorneys general from New Jersey, California, Massachusetts, New York, and Illinois — argue that the changes are unlawful and could dramatically increase state health care costs.
The lawsuit focuses on four key concerns:
Shortened enrollment periods that limit consumers’ ability to obtain marketplace coverage.
A $5 monthly fee for certain ACA shoppers that could discourage sign-ups.
Removal of transgender health care services from the essential benefits required under ACA coverage.
Increased paperwork and eligibility hurdles that plaintiffs say will force millions to prove eligibility for subsidies and insurance through burdensome procedures.
According to the lawsuit, the Trump administration estimates that up to 1.8 million people could lose coverage due to these changes. The plaintiffs claim the rule violates federal administrative law by being “arbitrary and capricious.”
“As New Jersey and other states prepare for the 2026 open enrollment period, the Trump Administration is seeking to cause confusion and chaos in the healthcare marketplace,” said New Jersey Attorney General Matthew Platkin. “This rule increases costs for our states and creates barriers to enrollment.”
The Centers for Medicare & Medicaid Services (CMS), which finalized the rule in June, said its intent was to reduce improper federal expenditures and limit fraud. However, the states argue the consequences will be deeply harmful to vulnerable populations, especially low-income and transgender individuals.
The lawsuit calls on the court to block the rule’s implementation before it takes effect next month, warning of immediate and long-term consequences to both individuals and state budgets.
Related topics:
