New Jersey and New York sue to block Trump admin. changes to health insurance marketplaces

Key Points:

• The attorneys general of New Jersey and New York, along with nearly two dozen Democratic-led states, have filed a lawsuit to block a Trump administration rule that they argue will undermine the Affordable Care Act (ACA) and make health insurance less accessible.
• The contested rule, issued by the Centers for Medicare & Medicaid Services in May, expands eligibility for catastrophic health plans, which have low premiums but limited coverage and high out-of-pocket costs, and increases out-of-pocket spending limits for these plans starting in 2027.
• Critics, including New Jersey AG Jennifer Davenport and New York AG Letitia James, warn that the rule will reduce coverage, raise costs for standard plan holders, and sabotage the ACA by encouraging more people to switch to catastrophic plans, which were intended only as a last resort.
• The rule also introduces new income-verification requirements for enrollees and mandates that states cover costs for benefits beyond the ACA's Essential Health Benefits starting in 2028, shifting more financial responsibility to states.
• The Trump administration defends the rule as a measure to prevent fraud, provide more coverage options, and increase insurer flexibility, while recent data shows significant drops in health insurance coverage in New Jersey and New York following the failure to extend ACA premium tax credits.