ACA Changes Trigger Lawsuit Over Coverage Losses

Cities and advocacy groups challenge new rules, alleging procedural violations and potential harm to millions.

A coalition of Democratic-led cities has filed a lawsuit against the **Trump** administration, contesting revisions to the Affordable Care Act (ACA) that they claim could strip health insurance from almost two million people. The legal challenge aims to reverse the changes.

Key Provisions of the Rule

The contested rule, which was finalized in June, reduces the enrollment window for individuals purchasing insurance through the marketplace. Moreover, it discontinues a special monthly enrollment option for those with incomes below 150% of the federal poverty level. More stringent pre-enrollment conditions, such as income verification, are also being introduced.

The Centers for Medicare & Medicaid Services (CMS) projected that between 725,000 and 1.8 million individuals might lose their health coverage because of the new rule. However, CMS asserted the changes would introduce new safeguards against incorrect enrollment and excessive spending.

Legal Challenge Details

The lawsuit, submitted to a federal court in Maryland, is a joint effort by the cities of Chicago, Baltimore, and Columbus, Ohio, alongside a physician association and a non-profit network of small businesses reliant on the ACA marketplace.

Plaintiffs argue that the new rule infringes on the ACA and other federal statutes. They also contend that the administration bypassed federal rulemaking procedures during policy creation, notably by neglecting to address public feedback during finalization.

Attorneys representing the plaintiffs stated in the lawsuit that, “Rather than reducing the cost of insurance for consumers, or increasing their enrollment rates and benefits, Defendants’ new policies will cause at least 1.8 million Americans to lose coverage on the ACA’s health insurance Exchanges in 2026 alone and will ultimately result in higher premiums in the long term and higher out-of-pocket costs for the remaining enrollees.”

The plaintiffs, backed by attorneys from Democracy Forward, are requesting the court to nullify the contested sections of the new rule. Approximately 16.3 million Americans have obtained health coverage through the ACA marketplaces, highlighting the law’s significant role in providing access to healthcare (KFF, 2023).

Government Response

A spokesperson for the Department of Health and Human Services (HHS), CMS’s parent agency, defended the rule in a statement to CNN, saying, “The rule closes loopholes, strengthens oversight, and ensures taxpayer subsidies go to those who are truly eligible—that’s not controversial, it’s common sense.” They asserted the rule would reduce premiums and “strengthens, not weakens, access by making the system more stable, fair, and sustainable.”

Arguments for the Rule Changes

Supporters of the **Trump** administration’s adjustments argue that the ACA marketplace is susceptible to fraud due to the expanded subsidies or tax credits. According to the conservative think tank Paragon Health Institute, millions are enrolling in these affordable plans despite being ineligible for the heavily subsidized plans.

Congress broadened these subsidies in 2021 during the Covid-19 pandemic; these temporary tax credits are scheduled to expire by the close of 2025. These boosted subsidies contributed to a record 24 million individuals signing up for coverage in 2025.

The new rule is slated to take effect in late August. A House bill from **President Donald Trump** would codify the rule into law, though Senate legislation contains different provisions, which would also tighten eligibility for subsidies and increase verification requirements.