States Led by California Sue HHS to Block Rule Cutting Medicaid, CHIP Reimbursements for Gender‑Affirming Care

A coalition led by California and four other Democratic attorneys general sued the U.S. Department of Health and Human Services on Wednesday, seeking to block a federal rule that would cut off Medicaid and Children’s Health Insurance Program reimbursements for some gender-affirming care for minors beginning Oct. 13.

The rule, published by HHS’ Centers for Medicare and Medicaid Services in the Federal Register on Aug. 13, would end federal Medicaid funding for covered care provided to patients younger than 18 and federal CHIP funding for the same care for patients younger than 19. It does not directly ban providers from offering the care or impose penalties on them for doing so. Instead, it targets whether the federal government will reimburse states through Medicaid and CHIP.

California Attorney General Rob Bonta said he co-led the lawsuit with Illinois Attorney General Kwame Raoul, Maryland Attorney General Anthony Brown, Connecticut Attorney General William Tong and Massachusetts Attorney General Andrea Joy Campbell. The suit, backed by 21 attorneys general and one governor, was filed in the U.S. District Court for the District of Massachusetts. The states are asking the court to declare the rule unlawful and block HHS from implementing or enforcing it before the effective date.

“HHS has disregarded the law and its own policy precedent in another attempt to restrict transgender individuals’ access to crucial care,” Bonta said.

The plaintiff states argue that HHS exceeded its legal authority, improperly intruded on states’ power to regulate the practice of medicine and relied on a distorted reading of the evidence. They also contend the rule unlawfully prevents Medicaid and CHIP from covering care that some states consider medically necessary, in conflict with the Social Security Act and longstanding agency precedent, according to California’s announcement of the case.

HHS, in the final rule, said the evidence supporting the benefits of these interventions for children is “uncertain” and that harms are plausible or documented. The agency refers to the care as “sex-rejecting procedures,” terminology also used in the rule’s title, while California and the plaintiff states describe it as gender-affirming and medically necessary care.

Even if the rule takes effect, states could still pay for the care with state-only funds. California also said providers in the state could continue to legally offer gender-affirming care because the federal action concerns reimbursement, not whether the treatment is lawful. The rule includes a limited six-month continuation period for federal reimbursement of cross-sex hormone therapy medications for beneficiaries who were already actively receiving that therapy as of Oct. 13. Federal reimbursement for new hormone therapy starts, surgeries and puberty blockers would end on the effective date.

The lawsuit is the latest fight over HHS actions on transgender health care dating to December 2025, when the department announced related proposals and a declaration by HHS Secretary Robert F. Kennedy Jr. In a related case, State of Oregon v. Kennedy, a federal judge in Oregon on April 18, 2026, vacated Kennedy’s December 2025 declaration on administrative-law grounds, a ruling the new coalition points to as part of the broader dispute over HHS authority in this area.