KCHW NEWS REPORTS

Washington has joined a coalition of 20 states in a federal lawsuit challenging new regulations from the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services (CMS), arguing the changes will lead to significant harm to residents and the state’s health insurance marketplace.

Filed in federal court in Massachusetts, the lawsuit claims that recently announced federal rules will discourage thousands of Washingtonians from enrolling in health insurance through the Washington Health Benefit Exchange. According to the state Attorney General’s Office, the result could be a loss of $100 million in uncompensated hospital care annually and up to $10 million in revenue losses for the exchange.

Set to take effect August 25, the new CMS rules include tighter income verification measures and exclude recipients of Deferred Action for Childhood Arrivals (DACA) from Affordable Care Act (ACA) marketplace eligibility. The DACA program allows undocumented immigrants brought to the U.S. as children to live and work legally in the country.

The federal government says the rule is designed to reduce fraud and cut improper enrollments, projecting savings of up to $12 billion and an average 5% reduction in premiums nationwide.

But Washington officials warn the consequences will be severe. The rule also removes gender-affirming care as an Essential Health Benefit under the ACA. Although Washington law still mandates coverage for that care, state insurers will now have to bear the cost, estimated at $1 million annually.

Gov. Bob Ferguson condemned the move, calling it an unlawful attempt to restrict access to health care. Insurance Commissioner Patty Kuderer echoed the concern, stating that the federal rule shifts costs onto consumers and states.

The lawsuit argues the rule is arbitrary, capricious, and violates the Administrative Procedure Act. Washington officials note that during the federal comment period, they warned the agencies that as many as 80,000 residents could lose their coverage due to the expiration of tax credits.

The lawsuit seeks to block implementation of the rule before it takes effect in late August.