States rip feds over new Affordable Care Act coverage provisions

The states say the new rule will decrease enrollment and drastically increase out-of-pockets costs.OAKLAND, Calif. (CN) — A coalition of states sued two federal health agencies and administrators Friday, challenging a federal rule they say is unlawful under the Affordable Care Act.California Attorney General Rob Bonta, 20 attorneys general and the governor of Pennsylvania filed the federal complaint in the Northern District of California against the U.S Department of Health and Human Services Secretary Robert Kennedy and Centers for Medicare and Medicaid Services administrator Mehmet Oz.The states say the new federal provisions, the 2027 Notice of Benefit and Payment Parameters will drastically increase out-of-pocket costs over standard Affordable Care Act plans while only offering limited coverage.“Defendants have again announced sweeping and harmful changes to the regulations that govern the ACA’s marketplaces,” the states say in their 32-page complaint.“Like the 2025 rule, the 2026 rule will decrease enrollment and increase costs for millions of Americans who rely on the ACA to afford health coverage for themselves and their families. Defendants estimate that the 2026 rule will decrease enrollment by up to 5 million people from 2026-2030, with 2 million of those enrollment losses occurring in 2027.”The states say the new rule revives four provisions, including additional income verification requirements and penalties for users that don’t complete tax-credit paperwork, that a federal court vacated after finding them arbitrary and illegal, while also imposing new provisions that will harm the Affordable Care Act by shifting costs to enrollees and to states.“Plaintiff states’ newly uninsured residents will suffer firsthand the harm caused by the lack of access to necessary, affordable healthcare that the ACA was designed to provide, while the cost of their care falls on the states,” the states say.A coalition of cities and health professionals sued the U.S. Department of Health and Human Services a year ago over the 2025 rule, as did 21 states.The 2026 rule, the states say, expands eligibility for enrollment in “barebones catastrophic plans far beyond the eligibility limits for those plans imposed by the ACA" yet will result in a net decrease in enrollment. The states seek the court to declare the new rule arbitrary and capricious and to its block implementation.“The Affordable Care Act was designed to make healthcare more affordable and accessible,” Bonta said in a statement. “But once again, this administration is moving in the wrong direction by adopting harmful provisions that push consumers into barebones plans and strip away critical protections.”The states’ claims include violations of the Administrative Procedure Act, arbitrary and capricious agency action and agency action contrary to law.Plaintiffs joining California include Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania Governor Josh Shapiro, Rhode Island, Vermont, Virginia, Washington state, and Wisconsin.The U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services did not immediately respond to requests for comment.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads