New York Attorney General Letitia James sued the federal government Thursday over cuts to the Affordable Care Act (ACA).
The suit, brought by James and a coalition of 20 other states, argues a new rule changing how states operate the ACA marketplace, where individuals purchase healthcare plans, would create significant barriers to healthcare access. The change could strip coverage from two million people by shortening enrollment windows, limiting automatic reenrollment and adding burdensome verification requirements, according to a press release from James’ office.
Filed in Massachusetts federal court, the suit asks for an injunctive against the rule based on the significant public health consequences.
James said in a statement that the new rule will disproportionately impact low-income and working-class people, whom the ACA is designed to help.
“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.”
The rule change, set to go into effect in August, would increase the cost of premiums, co-pays and deductibles. It would also eliminate coverage for gender-affirming care.
The government argued the changes were necessary to eliminate “waste, fraud and abuse.” The Trump administration estimated the program would save between $10.3 billion and $12.4 billion in 2026, recognizing that nearly two million people could lose coverage.
The Affordable Care Act, also known as Obamacare, has operated through state-level marketplaces since it was signed into law in 2010. States could require additional coverage to the federal minimum, as New York has done.
The federal government’s new rule would require all exchanges to implement these programs, regardless of the state’s success rate.
Since New York implemented the ACA marketplace, the state’s uninsured rate dropped from 11% to 4.8%. Over 220,000 New Yorkers get health insurance through the marketplace, 12,000 of whom will lose coverage under the new rule, according to James’ office.
The lawsuit comes just two weeks after President Donald Trump’s signature domestic policy bill passed Congress, which New York Gov. Kathy Hochul and independent policy organizations said could cut health insurance for 1.5 million New Yorkers.
Democrats in New York and across the country have made cuts to Medicare and Medicaid an important part of their campaign against both Trump and local Republicans.
“Medicaid is literally the lifeline for one in three New Yorkers,” Hochul said at a Thursday press briefing. “Cutting this essential healthcare doesn’t keep people from getting sick, it doesn’t stop babies from being born. It’s simply saying, ‘You’re on your own.’”
Hochul also criticized New York’s seven congressional Republicans for voting for Trump’s bill, saying they will be held responsible in the midterm elections.
“What’s really cynical about what they just did is that they postponed some of the pain until later, hoping that New Yorkers will have amnesia when it comes to election time next year, and forget what they’ve unleashed on their own districts,” Hochul said. “I won’t let them forget. They will not get away with this.”
The lawsuit only targets certain portions of the ACA rule, leaving unchallenged other changes, such as eliminating coverage in all states for DACA recipients, who gained access to the marketplace in November 2024.
James said the ACA has worked for New York and the federal government is threatening that success.
“In New York, we have expanded coverage, improved affordability, and protected New Yorkers’ health,” James said. “The federal government should take every opportunity to learn from that success, not actively work to reverse it.”
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