Judge Blocks Key Provisions of New ACA Marketplace Rule

On August 22, 2025, U.S. District Judge Brendan Hurson in Baltimore issued a preliminary injunction halting key provisions of the Marketplace Integrity and Affordability Rule, a federal regulation finalized in June by the Department of Health and Human Services' Centers for Medicare & Medicaid Services (CMS). The rule, set to take effect on August 25, aimed to prevent improper enrollments and misuse of federal funds within Affordable Care Act (ACA) marketplaces. However, the cities of Chicago and Baltimore, along with public health advocates, challenged the rule, arguing it would increase fees and impose barriers leading to the loss of coverage for over 2 million individuals, particularly affecting low-income populations.

The Marketplace Integrity and Affordability Rule introduced several significant changes to the ACA marketplaces:

• Elimination of Monthly Special Enrollment Period (SEP): The rule proposed ending the monthly SEP for individuals with household incomes below 150% of the federal poverty level (FPL). CMS argued that this SEP allowed individuals to delay enrollment until they required medical care, potentially destabilizing the insurance risk pool.

• Income Verification Requirements: To ensure eligibility for premium subsidies, the rule mandated stricter income verification processes.

• Pre-Enrollment Verification for SEPs: The rule required pre-enrollment verification for most SEPs, aiming to close loopholes that permitted individuals to enroll only when needing care, thereby improving the risk pool.

• $5 Monthly Premium for Auto-Reenrolled Individuals: Enrollees automatically re-enrolled in fully subsidized plans without eligibility verification would be charged a $5 monthly premium, encouraging active engagement in their health coverage.

• Standardization of Open Enrollment Period: Starting with the 2027 plan year, the rule aimed to standardize the Annual Open Enrollment Period, ending it by December 31 for all health insurance exchanges.

On July 1, 2025, the cities of Chicago and Baltimore, along with public health advocates, filed a lawsuit challenging the rule. They contended that the rule would increase fees and impose barriers, potentially leading to the loss of coverage for over 2 million individuals, particularly affecting low-income populations. Judge Hurson sided with the challengers, noting sufficient evidence that the rule could violate the ACA.

Chicago Mayor Brandon Johnson praised the ruling, stating it would "help our residents obtain reasonably priced health insurance and reduce the burden on our health clinics to provide free care." The American Hospital Association (AHA) had previously expressed concerns about the rule, estimating that between 750,000 to 2 million consumers could lose their coverage due to the provisions.

Health insurers have been experiencing rising medical costs in their ACA plans, partly due to some members increasing their use of services in anticipation of dropping out of coverage. Insurers are requesting the biggest premium increases on ACA plans since 2018, anticipating a smaller, sicker pool.

The injunction preserves current enrollment processes, preventing potential coverage losses for low-income individuals who might have been affected by the rule's provisions. However, the ruling introduces uncertainty into the marketplace, potentially affecting premium rates and the overall stability of the health insurance market. The case highlights the challenges in crafting regulations that balance fraud prevention with maintaining accessible healthcare coverage, indicating a need for nuanced policy approaches.

Judge Hurson's injunction against key provisions of the Marketplace Integrity and Affordability Rule represents a pivotal moment in the ongoing discourse over healthcare policy in the United States. As the legal proceedings continue, stakeholders across the healthcare spectrum will be closely monitoring developments, recognizing the profound implications for millions of Americans relying on ACA marketplaces for their health coverage.