Blue States Lose Bid to Halt HHS Obamacare Enrollment Changes

A Massachusetts federal judge rejected a group of blue states’ bid to temporarily pause a Trump administration rule that is projected to reduce enrollment on the Affordable Care Act health insurance exchanges.

The states failed to adequately demonstrate that they are likely to succeed on the merits of their argument that the Department of Health and Human Services violated the Administrative Procedure Act when issuing the regulation, Judge Nathaniel M. Gorton of the US District Court for the District of Massachusetts said in his order Wednesday.

The rule (RIN 0938-AV61), released by the Centers for Medicare & Medicaid Services in June, would limit enrollment in a number of ways, including by imposing a $5 surcharge on low-income auto-enrollees who don’t verify their eligibility and reducing enrollment periods on the state-run exchanges. The suit is similar to a case filed by Baltimore; Chicago; and Columbus, Ohio.

California and New Jersey led a coalition of 21 states in suing the CMS, the Department of Health and Human Services, CMS Administrator Mehmet Oz, and HHS Secretary Robert F. Kennedy Jr. in July. They argue the rule is arbitrary and capricious because it exceeds the department’s authority and violates the APA.

The US District Court for the District of Maryland largely stayed the rule in August in the separate challenge brought by cities.

Judge Brendan A. Hurson said in that ruling that the cities showed they were likely to succeed in their claims related to the $5 fee on low-income auto-enrollees, a provision broadening the actuarial value of exchange plans, language allowing plans to deny coverage to those with outstanding bills, and measures tightening eligibility verifications.

The US Court of Appeals for the Fourth Circuit upheld that ruling in September, rejecting the Trump administration’s request to overturn the pause on the rule while litigation plays out.

The CMS projects the measures will reduce enrollment by up to 1.8 million in 2026. The rule was set to take effect Aug. 25.

The case is California v. Kennedy, D. Mass., No. 1:25-cv-12019, motion for preliminary injunction denied 10/1/25.