Democratic Governors Challenge Proposed Federal Rule Restricting State Health Insurance Marketplaces

Several Democratic governors, including New Mexico Governor Michelle Lujan Grisham, have expressed concerns over a proposed rule by the Trump administration aimed at limiting state regulation of health insurance marketplaces established under the Affordable Care Act (ACA).

The proposed changes include shortening the open enrollment period to November 1 through December 15, which officials warn could confuse current enrollees and reduce access to coverage. New Mexico operates its own state-run marketplace, BeWell, serving over 70,000 residents, many of whom rely on state-funded subsidies to secure affordable coverage. Key aspects of the rule would also remove Dreamers (recipients of DACA) from eligibility, tighten income verification, and restrict coverage for certain treatments categorized as essential health benefits, including some transgender healthcare services. 

Governors from several states submitted a letter urging the Centers for Medicare and Medicaid Services (CMS) to withdraw portions of the Marketplace Integrity and Affordability Proposed Rule, citing potential disruption and increased administrative barriers. BeWell officials echoed these concerns, emphasizing the impact of the shortened enrollment period and new requirements for automatic reenrollment, especially amid a transition to a new enrollment platform.

CMS defended the proposal as a safeguard against improper enrollments but faces pushback over the rule's potential to reduce consumer choice and coverage continuity. The proposed changes align with prior federal policies under the Trump administration focused on tougher eligibility verification and enrollment controls. The controversy highlights ongoing tensions between federal oversight and state autonomy in managing health insurance exchanges critical to uninsured or underinsured populations.

The rule's effects on enrollment timing, eligibility, and essential benefit definitions could have market-wide implications for states running their own insurance marketplaces.