New York Attorney General Letitia James filed a lawsuit on Thursday to block a sweeping federal regulation she says would illegally strip health care coverage from millions of Americans, raise costs, and discriminate against transgender individuals.
The legal challenge, joined by 20 other states and the governor of Pennsylvania, targets a rule finalized by the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) that is set to take effect in August.
“This new rule is an illegal and dangerous attack on health care access,” James said. “It strips working families of their health care coverage, imposes unnecessary red tape, and deliberately targets low-income and transgender Americans.”
According to the complaint, the federal rule violates the Affordable Care Act (ACA) and the Administrative Procedure Act by imposing burdensome enrollment requirements and limiting access to essential benefits. It shortens open enrollment periods, restricts automatic reenrollment, adds verification barriers, and introduces monthly charges even for zero-premium plans.
The attorneys general argue the regulation undermines the ACA’s mission to expand access to affordable health care, threatening coverage for up to two million Americans, by the administration’s own estimates.
In New York alone, more than 220,000 people receive coverage through the state’s ACA marketplace. James’ office says the new policy could cause 12,000 residents to lose coverage and force the state to spend over $10 million updating its systems. The state’s uninsured rate has dropped from 11 percent to 4.8 percent since the marketplace launched.
The rule also prohibits states from treating gender-affirming care as an essential health benefit under the ACA, even when similar treatments remain covered for other conditions. James and the coalition argue this exclusion has no medical justification and will cause serious harm—particularly to transgender youth.
The lawsuit asserts that overriding states’ authority to operate their own marketplaces will devastate well-functioning systems like New York’s. James said the federal government should learn from New York’s success in expanding access—not attempt to reverse it.
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