States take Trump administration to court over Medicaid rule

A coalition of 25 Democratic-led states and the District of Columbia sued the Trump administration Monday, seeking to block new federal guidance they say unlawfully narrows exemptions to Medicaid work requirements and could strip health coverage from vulnerable Americans.

The lawsuit, filed in federal court in Massachusetts, challenges an interim final rule issued by the Centers for Medicare & Medicaid Services that implements work requirements enacted as part of last year's tax and spending law. The states argue the administration's interpretation of the law is far more restrictive than Congress intended, particularly for people who are seriously ill or disabled.

“The Trump Administration’s attempt to impose new, burdensome requirements on Medicaid recipients threatens access to healthcare for our most vulnerable residents and families," Massachusetts Attorney General Andrea Joy Campbell said in a statement Monday.

Under the rule, most Medicaid beneficiaries between ages 19 and 64 must complete at least 80 hours each month of work, school or other qualifying activities to maintain coverage unless they qualify for an exemption. The lawsuit centers on the administration's definition of "medically frail," which the states contend is so narrow that many people with significant medical conditions could lose eligibility or face burdensome documentation requirements.

The coalition argues the guidance violates the Administrative Procedure Act because it departs from prior federal policy without adequate justification and imposes new requirements without proper notice and comment. The complaint also alleges the administration unlawfully conditions federal Medicaid funding by forcing states to implement policies that conflict with federal law.

Not enough time, AGs say

Campbell, who is co-leading the lawsuit, said the guidance creates unnecessary barriers to health care for vulnerable residents and exceeds the administration's legal authority.

The states also contend they were left with little time to comply. The guidance requires states to notify Medicaid recipients by Aug. 31 ahead of the work requirements taking effect Jan. 1, 2027, giving states only a matter of weeks to redesign eligibility systems and train staff, according to the complaint.

"New Yorkers who are battling cancer, living with a disability, managing a serious mental health condition, or recovering from addiction should be able to get the health care they need without being buried in paperwork," said NY Attorney General Letitia James.

The Trump administration has defended the policy as an effort to ensure Medicaid serves eligible recipients while encouraging work and reducing improper enrollment. Administration officials have said the guidance faithfully implements the law enacted by Congress.

The lawsuit includes attorneys general from 23 Democratic-led states as well as the Democratic governors of Kentucky and Pennsylvania, where Republican attorneys general declined to participate. Together, the plaintiffs represent states that administer Medicaid for tens of millions of low-income Americans.

The case is the latest legal challenge to the Trump administration's health care policies and adds to a growing number of multistate lawsuits over implementation of Medicaid and other federal health programs.

The states are asking the court to block enforcement of the guidance before implementation deadlines take effect.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.