Attorney General Bonta Co-Leads Lawsuit Challenging Trump Administration’s Effort to Expand Catastrophic Health Insurance Plans and Again Undermine Affordable Care Act Protections

Coalition sues over federal rule that reinstates provisions blocked by a federal court and adds new harmful changes

OAKLAND — California Attorney General Rob Bonta today co-led a coalition of 21 attorneys general and the Governor of Pennsylvania in filing a lawsuit in the U.S. District Court for the Northern District of California to challenge a federal rule that once again illegally undermines the Affordable Care Act (ACA) and would make health insurance more expensive and harder to obtain for millions of Americans. The lawsuit seeks to block provisions of the U.S. Department of Health and Human Services’ (HHS) and Centers for Medicare & Medicaid Services’ (CMS) 2027 Notice of Benefit and Payment Parameters, a federal rule that sets standards for health plans offered in 2027 and was opposed by the coalition in a March 2026 comment letter. Among other harmful changes, the rule expands eligibility for catastrophic health insurance plans that are ineligible for premium tax credits, offer only limited coverage, and can leave consumers facing significantly higher out-of-pocket costs than standard ACA plans. The rule also allows catastrophic and bronze plans to exceed ACA limits on maximum annual out-of-pocket costs, increasing the financial burden on consumers, and attempts to reinstate several provisions that a federal court recently found to be unlawful. The coalition argues these and other provisions unlawfully undermine the ACA’s goal of expanding access to affordable healthcare by increasing costs, reducing enrollment, and shifting financial burdens onto consumers, states, and healthcare providers.

“The Affordable Care Act was designed to make healthcare more affordable and accessible. But once again, this Administration is moving in the wrong direction by adopting harmful provisions that push consumers into bare-bones plans and strip away critical protections,” said Attorney General Bonta. “We are returning to court to challenge these unlawful changes. At a time when families are already facing rising costs, they cannot afford to pay more for coverage that gives them less.” 

Congress enacted the ACA to expand access to affordable health insurance, and more than 23 million Americans currently receive coverage through its marketplaces. California has approximately two million ACA plan enrollees, the third highest of any state. Today’s lawsuit follows the coalition’s challenge to the Trump Administration’s similar 2025 ACA Marketplace rule. Earlier this week, the U.S. District Court for the District of Massachusetts held a hearing on the parties’ cross-motions for summary judgment in that case, with a final decision expected at a later date. In related litigation, a federal court last month vacated several provisions of the Administration’s 2025 rule — including provisions at issue in this case — after finding that they violated the Administrative Procedure Act. The Administration’s new rule setting standards for 2027 health plans, which is the subject of this lawsuit, brings back many of the same provisions and adds new changes that further undermine the ACA. HHS estimates the new rule will cause two million people to lose coverage in 2027 alone and a total of five million by 2030.

In today’s lawsuit, the coalition argues that the new rule:

• Reimposes provisions that a federal court has already vacated — including additional income verification requirements and penalties for consumers who do not complete tax-credit paperwork — without addressing the court’s legal concerns.
• Unlawfully expands eligibility for catastrophic health plans beyond the limits established by Congress in the ACA.
• Unlawfully allows catastrophic and bronze plans to exceed ACA limits on maximum annual out-of-pocket costs.
• Will increase costs, reduce enrollment, and shift financial burdens onto consumers, healthcare providers, and states.
• Was adopted without adequate explanation or a meaningful response to the coalition’s comments, making it arbitrary and capricious under the Administrative Procedure Act.

In filing today’s lawsuit, Attorney General Bonta co-led the coalition alongside New Jersey Attorney General Jennifer Davenport. They were joined by the attorneys general of Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, as well as Pennsylvania Governor Josh Shapiro.