New Jersey Attorney General Jennifer Davenport is co-leading a coalition of 19 state attorneys general demanding that the Trump administration withdraw a proposed federal rule governing how Affordable Care Act marketplace plans operate starting in 2027. Davenport joined California Attorney General Rob Bonta and Massachusetts Attorney General Andrea Joy Campbell in filing a formal comment letter opposing the rule, which the Department of Health and Human Services and the Centers for Medicare and Medicaid Services released on February 11th as part of the routine annual process for setting marketplace parameters ahead of open enrollment.

What the States Are Objecting To

The coalition’s central complaint centers on the rule’s treatment of catastrophic health plans, a category of coverage originally intended by Congress under the 2010 ACA for narrow, limited use. Catastrophic plans currently require an individual to pay up to 12,000 dollars, or 24,000 dollars for a family, in out of pocket costs before coverage meaningfully begins. Under the proposed rule, those thresholds would rise to 15,600 dollars for an individual and 31,200 dollars for a family for the 2027 plan year, while simultaneously expanding who can enroll in catastrophic coverage to include people who do not qualify for Medicaid. The letter also flags a genuinely novel provision allowing insurers to offer catastrophic plans lasting up to ten consecutive years, with out of pocket limits that could vary depending on a person’s specific diagnosis, such as cancer or type 1 diabetes, a structure the states argue amounts to discrimination based on preexisting conditions that the ACA was written specifically to prohibit.

Beyond the catastrophic plan changes, the states’ letter raises objections to several other provisions, including the elimination of standardized health plan options in favor of a wider array of non-standardized and non-network plans, which the letter argues will make comparison shopping considerably more confusing for consumers. It also objects to a proposal to remove adult dental coverage from the list of essential health benefits without the statutorily required report to Congress, and to eliminating a special enrollment period that currently helps low income consumers who unknowingly lose Medicaid coverage transition into marketplace plans without a gap in coverage. Davenport also took direct aim at the fact that three provisions in the new proposal mirror parts of a prior rule that a court had already stayed as unlawful in litigation New Jersey and other states are actively pursuing, calling their reappearance in this proposal an audacious use of government resources.

The Case New Jersey Officials Are Making

Susan Ochs, acting commissioner of New Jersey’s Department of Banking and Insurance, argued the rule runs counter to nearly every goal the state has for its own residents’ health coverage, saying it would push consumers toward inadequate plans, complicate enrollment, increase opportunities for consumer fraud, and destabilize GetCoveredNJ, the state’s own marketplace exchange, which currently serves close to half a million residents. Dr. Raynard Washington, the state’s acting health commissioner, framed the stakes in more immediate terms, warning that routine preventive care already goes unused by too many New Jerseyans who cannot afford it, and that the proposed changes would push more people out of coverage entirely rather than closing that gap.

Governor Sherrill tied the proposed rule to a broader pattern she has attributed to the administration’s health policy choices over the past year, pointing to the expiration of enhanced ACA tax credits, which she said caused premiums to triple for roughly 500,000 New Jersey residents, and separate changes to Medicaid eligibility that she said removed coverage for 300,000 people in the state. The coalition’s comment letter argues that the cumulative effect of the newly proposed changes, layered on top of those earlier shifts, risks triggering what insurance regulators call a death spiral, a scenario in which healthier enrollees drift toward cheaper, thinner plans, leaving a smaller and sicker pool of people in comprehensive coverage and driving premiums higher for everyone who remains.

What Federal Officials Have Said the Rule Is Meant to Do

CMS has framed the same set of changes in considerably different terms in its own public rulemaking materials. The agency has said the point of loosening restrictions on catastrophic and bronze tier plans is to give consumers more flexibility to tailor coverage to their own needs and budgets, arguing that some enrollees, particularly younger, healthier individuals who rarely use medical services, are better served by a lower premium, high deductible option than by being funneled into more comprehensive coverage they may not need or be able to afford in the first place. CMS has also said that removing the requirement for insurers to offer standardized plans is intended to promote competition and innovation among insurers, giving companies more room to design new plan structures rather than working within a fixed template. The agency’s own rulemaking materials characterize the overall package as an effort to improve consumers’ access to affordable coverage rather than restrict it.

That framing has not gone unchallenged even from outside the group of Democratic attorneys general leading this specific comment letter. The American Hospital Association, a national trade group representing hospitals rather than a political actor in this fight, separately raised concerns in its own comments on the same rule, noting that a proposed 15,400 dollar individual deductible would sit nearly equal to the entire federal poverty level for a single person, and arguing that coverage requiring that much cost sharing before benefits apply is difficult to describe as affordable regardless of how the plan is marketed. That overlap suggests the affordability concerns driving this fight extend at least somewhat beyond the specific partisan coalition that filed this particular letter, even as the broader political fight over the rule’s fate plays out largely along familiar lines.

What Happens Next

As a proposed rule, the changes are not yet in effect, and the formal comment period gives federal regulators discretion over whether and how to revise the proposal before finalizing it. The states’ letter argues that the rule’s unusually late release in the rulemaking calendar, its 30 day comment window, and the limited time it would leave states to actually implement sweeping changes before the 2027 open enrollment period all compound the underlying policy objections, layering a process complaint on top of a substantive one. Whether CMS ultimately narrows, delays, or proceeds with the proposal as written will determine how directly New Jersey’s own marketplace, and the roughly half million residents who rely on it, end up affected once the 2027 plan year actually arrives.