Attorney General James Sues to Block HHS Rule That Will Strip Health Insurance from Millions of Americans 

NEW YORK – New York Attorney General Letitia James today joined 21 other states in suing U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr., over a new rule that will make it harder and more expensive for millions of Americans to get and keep health insurance. Every year, the Centers for Medicare & Medicaid Services (CMS) sets ground rules for how Affordable Care Act (ACA) marketplaces should operate, including enrollment requirements, income verification, and cost limits for consumers. This year’s rule, however, goes far beyond routine housekeeping, imposing new paperwork burdens and cost increases that federal officials themselves predict will cause up to five million people to lose coverage over the next five years, including two million people in 2027 alone. Attorney General James and the coalition are asking the court to strike down the unlawful changes and protect Americans’ access to health insurance.  

“Health care is not a privilege reserved only for the wealthy or the healthy. It is a right, and my office will always fight to protect it,” said Attorney General James. “This administration is trying to sabotage the Affordable Care Act through bureaucratic tricks instead of admitting it wants to take health insurance away from millions of Americans. New York will not stand by while families lose the coverage they depend on to see a doctor, fill a prescription, or afford a hospital visit.” 

The rule, issued in May, repeats the same provisions a federal court already found unlawful last year, including onerous new application and income-verification requirements for people seeking to enroll in health coverage. It also introduces new provisions that were not part of last year’s rule, dramatically expanding the number of people who will obtain barebones “catastrophic” insurance plans and allowing insurers to charge consumers more than federal law permits in out-of-pocket costs. The ultimate effect is to pile new administrative and financial burdens onto people trying to get or keep health coverage through the ACA marketplace. 

Under the rule, 75 percent of people who enroll in ACA plans outside of the open enrollment window due to a qualifying event will be forced to undergo complicated eligibility verification – a provision that a federal court already vacated as arbitrary and unsupported by evidence. It also reimposes two burdensome income-verification requirements on consumers before they can keep the financial help that lowers their monthly premiums.  

The rule also opens the door for far more people to enroll in “catastrophic” health plans, which charge low premiums but cover almost nothing until a patient has spent thousands of dollars out of pocket, and offer no access to financial assistance. Under the ACA, these barebones plans were meant to be a narrow option for young adults and people facing genuine financial hardship. The new rule would make roughly 80 percent of Americans under 65 eligible for these plans, a shift that could push healthier people out of standard plans and drive up premiums for everyone who remains. On top of that, the rule lets insurers sell catastrophic plans that cap cost sharing at a level 30 percent lower than the cap identified in the ACA, which could result in dramatically higher out-of-pocket costs than what federal law currently permits, exposing consumers to greater costs when they get sick or need care. 

A federal court already struck down nearly identical provisions in 2025 after finding that federal officials offered no evidence to justify them. Attorney General James and the coalition argue this year’s rule suffers from the same legal defects and violates the Administrative Procedure Act. The attorneys general are asking the court to strike down the unlawful provisions and block the administration from enforcing them. 

Joining Attorney General James in this lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, as well as Pennsylvania Governor Josh Shapiro.