Legal Challenge Against 2027 Federal Health Rule Affects ACA Benefits

Connecticut Attorney General William Tong, supported by a coalition of attorneys general from 21 states and the Governor of Pennsylvania, has launched a legal challenge against a federal rule affecting 2027 health plans which risks limiting the benefits of the Affordable Care Act (ACA).

The legal challenge, filed in the U.S. District Court for the Northern District of California, targets a federal rule by the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) as outlined in the 2027 Notice of Benefit and Payment Parameters. The rule has sparked controversy due to its implications for catastrophic health insurance plans, which could leave consumers with higher out-of-pocket expenses. Specifically, it allows such plans to exceed the ACA's caps on annual out-of-pocket costs, raising concerns about increased financial burdens on policyholders.

Broader Implications of the Rule

The rule in question is drawing attention not only for its potential consumer impacts but also for its compliance with the ACA’s foundational goal to broaden health insurance access. Catastrophic plans, typically offering limited coverage and ineligible for premium tax credits, could become more prevalent under the rule, potentially rolling back the ACA’s achievements. Over 23 million Americans rely on the ACA for coverage, and any undermining of its provisions could destabilize this safety net.

Attorney General Tong has emphasized the rule's threats to affordable healthcare, which is integral to protecting families in Connecticut and beyond. The coalition's lawsuit builds on a previous legal contestation of similar measures included in a 2025 rule, suggesting an ongoing battle over the rule's legal standing.

Legal Context and Proceedings

A hearing regarding motions for summary judgment on the 2025 rule recently took place in the U.S. District Court for the District of Massachusetts, with a court decision pending. Additionally, a federal court last month invalidated several provisions of the 2025 rule under the Administrative Procedure Act, echoing current concerns over the 2027 rule, which reintroduces many previously overturned elements.

The cornerstone of the coalition's argument against the 2027 rule lies in its allegedly arbitrary nature and the lack of sufficient response to public feedback during its adoption process. The rule's potential to decrease insured individuals by two million in 2027—according to HHS estimates—further underscores its far-reaching effects.

State Coalition's Stance

The coalition asserts that the rule reintroduces previously vacated provisions without addressing previous legal challenges and unlawfully broadens catastrophic plan eligibility. This also includes concerns about the disregard for ACA-established cost limits, which could inflate healthcare expenses for policyholders.

• Supports expanding eligibility for catastrophic plans, exposing consumers to potentially higher costs.
• Allows catastrophic and bronze plans to exceed ACA's maximum out-of-pocket cost limits.
• Could decrease the number of insured individuals by up to five million by 2030.

Alongside Connecticut, the coalition includes attorneys general from states such as Arizona, California, and New York, among others, with the Governor of Pennsylvania also joining the fight. Their unified action seeks to preserve the health reforms brought by the ACA and ensure protections remain intact for millions of Americans relying on accessible health insurance options.