21 US States sue CMS over new ACA restrictions

A coalition of 21 Democratic-led states are suing the US Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) over new Affordable Care Act (ACA) rules they allege would impose significant barriers to receiving health coverage.

The lawsuit, filed 17 July in the U.S. District Court for the District of Massachusetts, challenges a final rule that CMS introduced earlier this year to amend ACA marketplace regulations, which the plaintiffs argue will lead to millions of people losing access to health insurance, raise costs for states, and reduce the availability of essential health benefits.

The final rule is set to go into effect on 25 August and is projected by CMS to cause up to 1.8 million people to lose coverage. It aims to implement stricter verification requirements for eligibility, shorten open enrolment periods, and eliminate coverage for gender-affirming care as an essential health benefit. In the complaint, the 21 states argue that the changes violate the law and would harm consumers by increasing premiums and out-of-pocket costs, and by imposing burdensome new paperwork requirements that could deter people from enrolling.

The coalition argues that the rule is “arbitrary and capricious” and would place undue financial strain on state health programs, including Medicaid programs. The states also claim that the rule would increase costs by forcing them to provide more healthcare services to newly uninsured individuals, adding to Medicaid spending and costs for emergency care. The coalition, which includes California, Illinois and New York, is seeking preliminary relief to prevent the rule from taking effect as planned.

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Source: Becker's 18 July 2025