Dive Brief:
- Several Democrat-led cities and a county have sued the HHS seeking to roll back recent regulation concerning Affordable Care Act plans that’s anticipated to restrict enrollment on the exchanges.
- The cities of Columbus, Ohio; Baltimore; Chicago and Pima County, Arizona — alongside organizations Doctors for America and Main Street Alliance — said the regulation is unlawful and that the HHS failed to adequately consider public comments submitted on the rule.
- Although the Trump administration said its sweeping regulation was intended to strengthen oversight in the exchanges, the rule “creates numerous barriers to affordable insurance coverage” and will cause as many as 2 million enrollees to drop coverage in 2027 alone, plaintiffs said in the lawsuit.
Dive Insight:
ACA plans have experienced a tumultuous year. More generous subsidies for the plans expired at the end of 2025, causing premiums to skyrocket for many enrollees. More than 1 million fewer people signed up for coverage on the ACA exchanges as a result, and an increasing number of Americans are turning to plans with cheaper monthly premiums but higher cost sharing.
In May, the Trump administration finalized a rule that added more restrictions beginning in 2027 for those seeking to sign up for an ACA plan and expanded access to cheaper plans with high deductibles, dubbed catastrophic plans. It also required additional verification for low-income enrollees and those who sign up during special enrollment periods.
At the time, the CMS said the rule would crack down on abuse in ACA plans, a common complaint from Republicans who cited fraud when the party allowed enhanced subsidies to expire last year.
The lawsuit, filed last week in the U.S. District Court for Maryland, says the regulation is unlawful and an attempt to undermine the exchanges.
“Cloaked in the pretense of government efficiency and fraud prevention, the 2026 rule creates numerous barriers to affordable insurance coverage, negating the ACA’s goal of extending affordable health coverage to all Americans, and instead increasing the population of underinsured and uninsured Americans,” the lawsuit says.
Regulations pertaining to tax credit penalties for enrollees who earn more than expected, additional verifications for low-income enrollees, the expansion of eligibility for catastrophic plans and others are unlawful and should be set aside, plantiffs said.
In addition, the cities and county said they will suffer harm if the uninsured rate increases and providers are saddled with higher uncompensated care costs.
“Health care must remain affordable and accessible to all our communities,” Chicago Mayor Brandon Johnson said in a statement. “Chicago is proud to join this coalition to once again stop an unlawful attack that would undermine the coverage our residents rely on.”
“This rule would create unnecessary barriers to coverage, increase costs, and put care further out of reach,” Dr. Meenakshi Bewtra, president of Doctors for America, said in a statement.
