Attorney General Jennifer Davenport today co-led the filing of a lawsuit challenging a federal rule that illegally undermines the Affordable Care Act (ACA), making health insurance more expensive and harder to obtain for millions of Americans, and which has already caused tens of thousands of New Jerseyans to go without health coverage.
The lawsuit, co-led by Attorney General Davenport and California Attorney General Rob Bonta and joined by 19 other attorneys general and one governor, seeks to block provisions of the Trump Administration’s ACA payment rule for 2027 health plans, which the same attorneys general previously opposed in a March 2026 comment letter.
“The Trump Administration’s policies have already caused over a million Americans to lose coverage. If these additional changes aren’t stopped, the situation will only get worse,” said Attorney General Jennifer Davenport. “New Jersey families are already reeling this year from the president’s refusal to extend ACA tax credits, his tariffs, and his war. Now, instead of lowering health insurance costs, the Trump Administration is reducing coverage and raising costs.”
Among other harmful changes, the rule expands eligibility for catastrophic health insurance plans that offer only limited coverage and can leave consumers facing significantly higher out-of-pocket costs than standard ACA plans.
The rule also allows catastrophic and bronze plans to exceed existing limits on maximum annual out-of-pocket costs, increasing the financial burden on consumers. The multistate coalition argues that these and other provisions unlawfully undermine the ACA by increasing costs, reducing enrollment, and shifting financial burdens onto consumers, states, and healthcare providers.
Today’s lawsuit follows the coalition’s challenge to the Trump Administration’s similar 2025 ACA Marketplace rule. Earlier this week, the U.S. District Court for the District of Massachusetts held a hearing on the parties’ cross-motions for summary judgment in that case. In related litigation, a federal court last month vacated several provisions of the Administration’s 2025 rule — including some provisions at issue in this case.
The Administration’s new rule setting standards for 2027 health plans brings back many of the same provisions that were challenged previously and adds new changes that further undermine the ACA. HHS estimates the new rule will cause two million people to lose coverage in 2027 alone and a total of five million people by 2030.
In today’s lawsuit, the coalition argues that the new rule:
- Reimposes provisions that a federal court has already vacated — including additional income verification requirements and penalties for consumers who do not complete tax-credit paperwork — without addressing the court’s legal concerns;
- Unlawfully expands eligibility for catastrophic health plans beyond the limits established by Congress in the ACA;
- Unlawfully allows catastrophic and bronze plans to exceed ACA limits on maximum annual out-of-pocket costs;
- Will increase costs, reduce enrollment, and shift financial burdens onto consumers, healthcare providers, and states; and
- Was adopted without adequate explanation or a meaningful response to the coalition’s comments, making it arbitrary and capricious under the Administrative Procedures Act.
Congress enacted the Affordable Care Act in 2010 to increase the number of Americans with health insurance and decrease the cost of healthcare. Between 2020 and 2025, enrollment in the ACA health insurance marketplaces doubled, and over 24 million people signed up for health insurance coverage through the ACA marketplaces for plan year 2025. That year, the Trump administration began its regulatory attempts to make health insurance more costly and harder to obtain, and it resulted in enrollment declining in 2026 by 1.2 million, the steepest annual decline in the ACA’s history.
New Jersey’s ACA exchange, Get Covered New Jersey, announced this year that nearly 70,000 residents dropped their health insurance coverage, most of them due to nonpayment, in the wake of the federal government failing to extend enhanced premium tax credits, which amounted to over $500 million in federal subsidies for New Jersey residents. In addition, fewer New Jerseyans were able to qualify for subsidies and overall monthly premiums became more expensive.
Assistant Attorney General Mayur P. Saxena is leading this matter on behalf of the State, along with Deputy Attorneys General Amanda Morejón, Estefania Pugliese-Saville, Bryce Hurst, and Joshua Bohn.
Attorneys General Davenport and Bonta were joined in filing today’s lawsuit by the attorneys general of Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, as well as Pennsylvania Governor Josh Shapiro.