Minnesota AG Sues Over Trump Rule Threatening Health Insurance Coverage

Legal Challenge to New Health Insurance Rule

Minnesota Attorney General Keith Ellison, along with leaders from 20 other states, has launched a legal challenge against the Trump administration’s new administrative rule. The plaintiffs argue that this rule would create significant obstacles for individuals seeking health insurance under the federal Affordable Care Act (ACA). According to the lawsuit, the rule could result in 1.8 million people losing their health insurance coverage and also increase out-of-pocket costs for many.

The rule is said to exclude coverage for gender-affirming care, which critics argue undermines essential health benefits. Ellison criticized the administration, stating, “Donald Trump spent his entire first administration trying to destroy the Affordable Care Act and kick millions of Americans off their health insurance, and now he’s back [at] it again.”

In response, a spokesperson for the U.S. Department of Health and Human Services (HHS) defended the rule, claiming it closes loopholes, strengthens oversight, and ensures that taxpayer subsidies are only given to eligible individuals. The rule pertains to state and federal health insurance marketplaces, commonly known as health exchanges, where individuals and families purchase private health insurance, often with federal tax credits under the ACA.

Minnesota’s marketplace, MNsure, is one of these platforms. HHS stated that the rule will lower individual health insurance premiums by approximately 5% on average, offering relief to American families who rely on the Marketplace. The agency called the policy “common sense.”

Key Provisions of the Final Rule

The final rule projects a decrease in average enrollment for 2026 by between 725,000 and 1.8 million people. It also shortens the open enrollment period, which previously stretched from November 1 to January 15 in most states, to December 31. Additionally, the rule limits special enrollment periods that allow sign-ups outside the annual open enrollment period and introduces new documentation requirements for applying for tax credits.

These changes were outlined in background materials published in June by KFF, a California-based health policy group. The lawsuit, filed in the U.S. District Court of Massachusetts, argues that the rule is arbitrary and capricious, violating the Administrative Procedure Act.

Ellison and other plaintiffs are seeking court action to prevent the rule from taking effect before its August 25 effective date. The lawsuit claims the rule creates unreasonable barriers to coverage and unlawfully prohibits coverage of any “sex-trait modification procedure” as an essential health benefit.

Federal Agency Defends the Rule

The federal Centers for Medicare and Medicaid Services (CMS), part of HHS, maintains that the rule protects consumers from improper enrollments and coverage changes. CMS asserts that the rule strengthens income verification processes and procedures for coverage redeterminations, while enhancing pre-enrollment verification during special enrollment periods to reduce improper enrollments.

“A number of the policies ... immediately tamp down on improper enrollments and the improper flow of federal funds,” the agency stated in a summary of the rule's provisions.

Impact on Premiums and Market Uncertainty

The legal battle comes as individuals purchasing health insurance through MNsure and other marketplaces prepare for potential steep premium increases next year. Preliminary figures released in June indicate that the four largest carriers in Minnesota’s individual health insurance market are seeking double-digit percentage rate increases for 2026, ranging from 12% to 26%.

Similarly, KFF reported that an analysis of preliminary rate filings in 19 states and Washington, D.C., found ACA marketplace insurers are requesting a median premium increase of 15% for 2026, marking the largest hike since 2018. KFF researchers noted that uncertainty in the rate filing process is partly due to the implementation of the Trump ACA integrity rule. However, they added that this does not seem to be driving rate changes in either direction based on current filings.

Final rates for 2026 have yet to be approved by regulators.