A group of Democratic attorneys general sued Thursday to block the implementation of portions of a Department of Health and Human Services rule set to go into effect next month that they say could lead to nearly 2 million people losing their health insurance.
The attorneys general of 20 states, including New Jersey, California and Massachusetts, joined with Pennsylvania Governor Josh Shapiro, a Democrat, to file the lawsuit in federal court in Massachusetts. They argue that the department’s actions illegally change the rules governing state and federal health insurance marketplaces created under the Affordable Care Act and therefore will push more health care costs onto the states.
The final rule creates barriers to enrollment for health insurance sold on marketplaces and will increase insurance premiums, co-pays and other out-of-pocket costs they claim. The Trump administration has said that up to 1.8 million people could lose their health insurance as a result, according to the lawsuit. The attorneys general are asking the court to block portions of the rule from taking effect next month.
“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, increase costs for our state, and create barriers to enrollment,” New Jersey Attorney General Matthew Platkin said in a statement.
A representative for HHS did not immediately respond to a request for comment. The rule, finalized by the HHS’s Centers for Medicare & Medicaid Services in June, includes provisions meant to limit improper enrollments and the improper flow of federal funds, according to CMS.
The lawsuit challenges parts of the rule that shorten enrollment periods and charge a monthly $5 fee for some marketplace shoppers. It also targets a provision barring transgender health care from the list of essential health benefits subject to mandatory coverage under the Affordable Care Act.
The lawsuit claims the rule imposes burdensome and expensive paperwork and will force consumers to spend millions to prove eligibility for coverage and subsidies. The states say the rule is arbitrary and capricious and was enacted in violation of federal administrative law.
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