Group of cities sues Trump administration over new changes to Obamacare enrollment and eligibility

CNN

01-07-2025

A group of Democratic-led cities sued the Trump administration Tuesday over new changes to the Affordable Care Act that they say will undermine the sweeping health care law and result in nearly 2 million Americans losing health insurance.
The rule, finalized on June 25, shortens the open enrollment period for Americans buying insurance on the marketplace and ends a monthly special enrollment period for people with incomes below 150% of the federal poverty line. It also introduces more preenrollment requirements, such as income verification checks.
The Centers for Medicare and Medicaid Services estimated last month between 725,000 and 1.8 million people could lose coverage due to the rule, but said the changes introduce new 'safeguards' against improper enrollment and overspending.
The lawsuit, filed in federal court in Maryland, was brought by the cities of Chicago, Baltimore and Columbus, Ohio, as well as an association of doctors and a non-profit network of small businesses that rely on the Affordable Care Act marketplace.
They allege that several parts of the new rule violate the ACA and other federal laws, and say the administration ran afoul of federal rulemaking procedures when it created the new policies, including by failing to respond to public comments submitted as the rule was being finalized.
'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,' attorneys for the plaintiffs wrote in the lawsuit.
The plaintiffs, represented by attorneys with Democracy Forward, are asking the court to wipe away the parts of the new rule they're challenging.
Spokespeople for CMS and its parent agency, the Department of Health and Human Services, did not immediately respond to a request for comment on the lawsuit.
Advocates for the Trump administration's rule changes say the ACA marketplace is rife with fraud because of expanded subsidies, or tax credits that keep Americans' monthly premiums low. Millions of people are enrolling in those low-cost plans even if their income makes them ineligible for heavily subsidized plans, according to conservative think tank Paragon Health Institute.
Congress expanded those subsidies in 2021 during the Covid-19 pandemic, but the temporary tax credits are set to expire at the end of 2025. The beefed-up subsidies helped drive a record 24 million people to sign up for coverage for 2025.
The new rule is set to take effect in late August. The House version of President Donald Trump's agenda bill would codify the rule into law, though the Senate legislation has different provisions, which would also tighten eligibility for subsidies and increase verification requirements.