States Sue Trump Admin Over Medicaid Work Rule Changes

A significant bloc of states, numbering at least 25 along with the District of Columbia, has launched a legal challenge against the Trump administration’s new Medicaid work requirements. The coalition argues that the policy, intended by the administration to curb fraud, instead unlawfully restricts access to essential healthcare coverage for vulnerable populations.

Legal Challenge to New Medicaid Policy

The lawsuit centers on an Interim Final Rule (IFR) issued by the Centers for Medicare & Medicaid Services (CMS). Plaintiffs contend that this rule contravenes federal law and deviates from the original legislative intent behind Medicaid, as well as earlier guidance from CMS itself. A key point of contention is how the rule alters the process for individuals seeking exemptions from work, volunteer, or school requirements due to severe medical conditions.

Previously, highly vulnerable Medicaid recipients were slated for automatic exemption from these requirements. Agencies were expected to review existing health records to grant these exemptions without demanding additional paperwork from individuals before the requirements were set to take effect in January 2027. However, the new IFR shifts this landscape.

Concerns Over Access and Vulnerable Populations

The states involved in the lawsuit include California, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington, Arizona, Colorado, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Pennsylvania, Virginia, Wisconsin, and Kentucky. They express deep concern that individuals with disabilities, those undergoing cancer treatment, or anyone managing a serious or complex health condition could lose the critical care they rely on.

According to the legal filing, CMS’s own projections suggest a substantial impact. The agency estimates that approximately 2.3 million enrollees could lose their Medicaid coverage within the first year of the rule’s implementation. Furthermore, the projections indicate that about 7% of enrollees who are currently working or qualify for an exemption might still lose coverage due to issues like confusing paperwork, stringent deadlines, or missing documentation.

Changes to Exemption Processes

Under the new rule, starting in 2028, individuals lacking immediate medical records on file would be limited to a single chance to submit a self-attestation form. This form would require them to declare, under penalty of perjury, that they are medically unable to work. This marks a significant departure from prior guidance, which allowed enrollees to use self-attestation multiple times as their health circumstances changed.

Plaintiffs also argue that the IFR would compel states to dismantle existing automated systems, which they have already invested in, and replace them with more complex and costly manual review processes. This would place an additional administrative burden on state agencies.

Administration’s Rationale

The lawsuit names Dr. Mehmet Oz, the administrator of CMS, and Robert F. Kennedy Jr., secretary of Health and Human Services (HHS), as defendants. Dr. Oz has publicly defended the rule, stating that such measures are necessary to prevent programs from being exploited. He has argued that able-bodied individuals receiving public funds should contribute to society.

“If you can work, you should get up and work,” Oz stated previously. “If we put guardrails around these programs, we’ll allow them to thrive. I’m here because I love Medicaid. The president has already said he loves and cherishes Medicaid and Medicare…. We cannot allow these programs to be defrauded into a turmoil that they cannot pull up from. If we love these programs, we will make the difficult decisions.”

The rule mandates that able-bodied individuals engage in qualifying activities for at least 20 hours per week, which can include working, volunteering, or pursuing education, while receiving Medicaid coverage.

Seeking Immediate Relief

As the August 31 deadline for states to issue notices to Medicaid enrollees approaches, the coalition of states is seeking immediate legal intervention. They are requesting a temporary stay and a preliminary injunction to halt the enforcement of the new rules by CMS and HHS. The core of their argument remains that the policy unfairly jeopardizes healthcare access for those who need it most, despite the administration’s stated goals of preventing fraud and promoting self-sufficiency.