Minnesota AG suing over Trump administration rule that may cut health insurance coverage

Minnesota Attorney General Keith Ellison and leaders from 20 other states have sued the Trump administration over an administrative rule they say would create significant barriers to health insurance coverage under the federal Affordable Care Act.

The rule could cause 1.8 million people across the country to lose health insurance, the plaintiffs say, while boosting out-of-pocket insurance costs and excluding coverage for gender-affirming care.

“Donald Trump spent his entire first administration trying to destroy the Affordable Care Act and kick millions of Americans off their health insurance, and now he’s back [at] it again,” Ellison said in a news release Friday.

A spokesperson for the U.S. Department of Health and Human Services (HHS) said the rule, which was finalized in June, closes loopholes, strengthens oversight and ensures taxpayer subsidies only go to people who are truly eligible.

It pertains to the state and federal “marketplaces,” also known as health exchanges, which are government-run websites and systems where individuals and families buy private health insurance, often with federal tax credits under the Affordable Care Act (ACA).

MNsure is Minnesota’s marketplace.

“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,” HHS said in a statement. “It’s common sense.”

The final rule projects average enrollment for 2026 will decrease by approximately 725,000 to 1.8 million.

Whereas the annual open enrollment period in recent years stretched from Nov. 1 through Jan. 15 in most states, the final rule will close the signup period on Dec. 31. It also limits the types of special enrollment periods that allow for sign-ups outside the annual open enrollment period while imposing new documentation requirements for some people when applying for tax credits, according to background materials published in June by KFF, a California-based health policy group

The lawsuit, which was filed Thursday in the U.S. District Court of Massachusetts, argues the final rule is arbitrary and capricious, contrary to law and a violation of the Administrative Procedure Act.

Ellison and other plaintiffs are seeking court action to prevent challenged portions of the final rule from taking effect in states bringing the litigation before the Aug. 25 effective date.

“The Final Rule ... erects unreasonable barriers to coverage,” the lawsuit says. It also “unlawfully prohibits coverage of any ‘sex-trait modification procedure’ as an essential health benefit (EHB), an unwieldy and novel term which could conceivably capture services in multiple EHB categories.”

The federal Centers for Medicare and Medicaid Services (CMS), which is part of HHS, contends the rule protects consumers from improper enrollments and coverage changes while establishing standards to ensure the integrity of the ACA exchanges. It strengthens income verification processes and procedures for coverage redeterminations, according to CMS, while boosting pre-enrollment verification during special enrollment periods to reduce improper enrollments.

“A number of the policies ... immediately tamp down on improper enrollments and the improper flow of federal funds,” the agency said in a summary of Final Rule provisions.

The litigation comes as people who buy health insurance through MNsure and marketplace exchanges across the country are bracing for what could be steep premium increases next year.

The four largest carriers in Minnesota’s individual health insurance market are seeking double-digit percentage rate increases for next year ranging from 12% to 26%, according to preliminary figures released in June.

Similarly, KFF reported Friday that an analysis of preliminary rate filings in 19 states and Washington, D.C., found ACA marketplace insurers are requesting a median premium increase of 15% for 2026, which would represent the largest hike in premiums since 2018.

“Another factor creating uncertainty in the rate filing process is the implementation of the Trump ACA integrity rule," KFF researchers wrote in their report. “However, based on what insurers have filed so far, this generally does not seem to be driving rate changes in either direction.”

Final rates for 2026 haven’t yet been approved by regulators.