Federal Court Blocks Key ACA Exchange Rule Changes; Administration Appeals
The Trump-era administration is appealing a federal court's decision that blocked multiple elements of its recent modifications to Affordable Care Act (ACA) exchange enrollment and eligibility rules. Defendants in the case include the Department of Health and Human Services (HHS), HHS Secretary Robert F. Kennedy Jr., the Centers for Medicare & Medicaid Services (CMS), and CMS Administrator Mehmet Oz. They have requested a stay on the August 21 ruling pending the appeal.
The original rule, called the "Marketplace Integrity and Affordability" rule, was introduced by CMS in June with the stated goals of reducing individual health insurance premiums by about 5% on average and saving taxpayers up to $12 billion in 2026 by curbing improper enrollments in ACA exchanges. Key provisions of the rule included shortening the enrollment period, stricter income verification processes, and imposing a $5 fee on certain individuals who auto-reenroll in free plans.
Plaintiffs challenging the rule comprised city mayors and advocacy groups who alleged the rule violates the Administrative Procedure Act and argued it would cause over 2.2 million Americans to lose health coverage. U.S. District Judge Brendan A. Hurson found that seven of the nine challenged provisions were likely unlawful and temporarily blocked those provisions, though two were allowed to remain. One critical provision affected actuarial value ranges for health plans, which about 80% of issuers in federally facilitated exchanges had utilized to design their offerings under the expanded ranges.
The court's stay forces issuers to redesign plans under previous narrower actuarial ranges, necessitating rapid state and federal review before the 2026 open enrollment. Officials warned this regulatory disruption could reduce plan options and negatively impact marketplace stability. Provisions left intact by the ruling include changes to calculating cost-sharing limits and the reconciliation extension window. This litigation underscores ongoing challenges in balancing program integrity, regulatory changes, and access within the ACA marketplaces, with significant implications for issuers, consumers, and taxpayers ahead of the next enrollment cycle.