A federal judge has paused portions of a new ACA rule that were set to take effect on Aug. 25, which included stricter eligibility verifications and limitations on premium subsidies.
“Eliminating coverage for an estimated 1.8 million people will drive up costs for the insured and lead to a significant decrease in the quality of care for the newly uninsured, which is unquestionably not in the public interest,” U.S. District Judge Brendan Hurson wrote Aug. 22.
The complaint was filed by a coalition of cities, small business groups, and healthcare providers challenging CMS’ “Marketplace Integrity and Affordability Rule,” which the agency claims will reduce improper enrollments and curb fraud within the ACA marketplace.
The new rule will repeal the monthly special enrollment period for individuals with incomes below 150% of the federal poverty guidelines and end the open enrollment period on Dec. 31, rather than Jan. 15, for plan year 2027. CMS said the changes would lower individual premiums by around 5% on average, and save around $12 billion in 2026 by cracking down on improper enrollments.
The plaintiffs argued that the rule’s provisions would lead to a significant increase in uninsured or underinsured individuals, resulting in cities being forced to allocate more resources to provide uncompensated care and place more strain on local healthcare systems. The rule would also impose new income verification requirements and make it more difficult for individuals to re-enroll in coverage if they have unpaid premiums.
In his decision, the judge ruled that the plaintiffs were likely to succeed on the merits of their claim that the rule was arbitrary and lacked sufficient evidence to justify its implementation. The judge found that CMS failed to properly address the claim that the new verification measures would disproportionately affect low-income applicants, and he paused the provisions related to stricter income verification requirements, the policy mandating individuals with unpaid premiums to pay before re-enrolling, and the exclusion of gender-affirming care from essential health benefits. The court is set to review the remaining provisions of the rule in the coming months.
A separate lawsuit filed by a coalition of 21 Democratic-led states in July is also challenging similar provisions of the new ACA rule.
