Doctors for America, the Main Street Alliance and three cities have sued the Centers for Medicare & Medicaid Services (CMS) over a recent Affordable Care Act (ACA) final rule the agency said will help counter improper enrollments.
The plaintiff cities named in the lawsuit are Baltimore, Chicago and Columbus.
The groups and cities say the regulation will cause upward of 1.8 million Americans to lose coverage in 2026, leading to downstream raised premiums and out-of-pocket costs.
“Cloaked in the pretense of government efficiency and fraud prevention, the 2025 rule creates numerous barriers to affordable insurance coverage, negating the ACA’s goal of extending affordable health coverage to all Americans, and instead increasing the population of underinsured and uninsured Americans,” the lawsuit reads.
Published in June, the final rule claims to thwart improper enrollments on the exchanges by ending monthly special enrollment periods, which allow individuals with incomes at or below 150% of the federal poverty level increased access to coverage. The administration said the enrollment periods were used by brokers and agents to improperly enroll people in ACA plans or switch them to different plans in a bid to secure higher commissions.
Further, the rule demands income verifications for people receiving premium tax credits and shortens the enrollment period to end Dec. 31.
“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,” said a Department of Health and Human Services (HHS) spokesperson in a statement to Fierce Healthcare. “Contrary to the claims asserted by liberal mayors and various organizations, this rule will lower individual health insurance premiums by approximately 5% on average providing real relief for American families who rely on the Marketplace.”
The cities and advocacy groups say the final rule, which goes into effect in August, contradicts federal law.
Plaintiffs pointed out enrollees must pay a $5 monthly surcharge next plan year until the person confirms an intent to remain on a zero-premium plan covered by premium tax credits. Independent estimates cited in the complaint find enrollment will decrease by 14% to 33% from this provision.
They also expect the update to weaken the quality of silver plan coverage, resulting in a less robust risk pool.
Today, there are some ACA plan enrollees that are not aware they owe premiums. For instance, they may stop paying for their plan under the impression this would cause a plan to be terminated. But the rule does not continue this practice.
“In other words, an individual might complete all the steps to enroll in coverage, including making the payment they understand to be needed to complete the transaction, only to learn at the end of the process that they have not been enrolled.” the plaintiffs said.
The lawsuit lays out a series of procedural changes that complicate an enrollee’s path to coverage, such as the revocation of a 60-day extension to locate proof of income documents.
“These provisions, each of which is prohibitive on its own, have a compounding effect in further restricting access to affordable health insurance coverage on the Marketplace,” the plaintiffs summarized.