A coalition of Democratic-led cities has filed a lawsuit against the Trump administration, challenging recent modifications to the Affordable Care Act (ACA) that they argue could lead to nearly 2 million Americans losing their health insurance. The rule, finalized on June 25, shortens the open enrollment period for marketplace insurance and eliminates a special monthly enrollment period for individuals with incomes below 150% of the federal poverty line. It also introduces stricter pre-enrollment requirements, including income verification checks.
The Centers for Medicare and Medicaid Services (CMS) estimated last month that between 725,000 and 1.8 million people could lose coverage due to these changes. However, CMS officials contend that the new rule implements necessary “safeguards” to prevent improper enrollment and overspending. The lawsuit, filed in federal court in Maryland, is backed by the cities of Chicago, Baltimore, and Columbus, Ohio, along with a doctors’ association and a non-profit network of small businesses reliant on the ACA marketplace.
Legal and Policy Implications
The plaintiffs claim that several components of the new rule violate the ACA and other federal statutes. They also argue that the administration breached federal rulemaking procedures by not adequately addressing public comments during the rule’s finalization. “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,” the lawsuit states.
Represented by attorneys from Democracy Forward, the plaintiffs are seeking to have the contested parts of the rule invalidated. The CMS and the Department of Health and Human Services have not yet commented on the lawsuit. Meanwhile, proponents of the rule changes argue that the ACA marketplace is plagued by fraud due to expanded subsidies, which keep premiums low for many Americans.
Background and Context
The ACA, commonly known as Obamacare, has been a contentious issue since its inception, with ongoing debates about its effectiveness and sustainability. The recent rule changes are part of a broader effort by the Trump administration to reshape the healthcare landscape, emphasizing reduced government spending and increased market efficiency.
Conservative think tank Paragon Health Institute supports the new rule, asserting that millions are enrolling in low-cost plans despite being ineligible for the heavily subsidized options. In 2021, Congress expanded these subsidies during the COVID-19 pandemic, leading to a record 24 million people signing up for coverage in 2025. However, these temporary tax credits are set to expire at the end of 2025.
Expert Opinions and Future Outlook
Healthcare policy experts are divided on the potential impacts of the new rule. Some argue that it could destabilize the marketplace by reducing the pool of insured individuals, thereby increasing premiums for those who remain. Others believe it could lead to a more efficient system by curbing fraudulent enrollments and ensuring that subsidies are allocated to those truly in need.
“The move represents a significant shift in how the ACA is administered, potentially affecting millions of Americans who rely on these exchanges for affordable healthcare,” said Dr. Emily Carter, a healthcare policy analyst.
The new rule is scheduled to take effect in late August. While the House version of President Donald Trump’s agenda bill seeks to enshrine the rule into law, the Senate’s legislation proposes different measures that would also tighten subsidy eligibility and enhance verification requirements.
Implications and Next Steps
The outcome of this lawsuit could have far-reaching implications for the future of the ACA and healthcare policy in the United States. If the court sides with the plaintiffs, it could halt the implementation of the new rule, preserving the current enrollment and subsidy structures. Conversely, a ruling in favor of the administration could pave the way for further changes to the ACA, aligning with the Trump administration’s broader healthcare agenda.
As the legal battle unfolds, stakeholders across the healthcare spectrum will be closely monitoring developments, with potential impacts on policy, insurance markets, and millions of Americans’ access to healthcare coverage.
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