Lansing, Michigan – For millions of Americans, the fight over the Affordable Care Act is no longer just about whether coverage exists. It is about what that coverage actually pays for, and how much money patients must spend before it helps.
Michigan Attorney General Dana Nessel is now challenging a federal rule she says could push families toward thinner insurance plans, higher medical bills and, in some cases, no coverage at all.
Nessel joined a coalition of 21 states in filing a lawsuit in the U.S. District Court for the Northern District of California. The case seeks to block several provisions in the federal government’s 2027 Notice of Benefit and Payment Parameters, which establishes standards for health plans offered through Affordable Care Act marketplaces.
The rule was issued by the U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services. The coalition had already opposed the proposed changes in a March 2026 comment letter.
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At the center of the dispute is an expansion of eligibility for catastrophic health plans. Those policies generally provide limited coverage, are not eligible for premium tax credits and can leave consumers responsible for considerably higher costs than standard ACA plans.
The rule would also permit catastrophic plans to exceed the ACA’s maximum annual out-of-pocket limits. According to the lawsuit, that change could shift more financial pressure onto patients, hospitals, healthcare providers and state governments.
“Instead of making healthcare more affordable and accessible when families need it most, the federal government is stripping coverage from thousands of Michiganders and destabilizing our entire healthcare system,” Nessel said.
“While the Trump administration has abandoned its duty to lower costs, I will not back down from defending the well-being of Michigan residents.”
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More than 23 million Americans currently receive health insurance through ACA marketplaces. HHS estimates that the new rule will result in two million people losing coverage in 2027 and five million losing coverage by 2030.
The coalition also argues that the administration is attempting to revive provisions from its 2025 marketplace rule that a federal court recently found unlawful. Those measures include additional income verification requirements and penalties for people who do not complete paperwork connected to tax credits.
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Attorneys general challenging the rule say the administration failed to address the earlier court’s legal concerns or meaningfully respond to states’ objections. They contend the rule is arbitrary and capricious under the Administrative Procedure Act.
Nessel was joined by attorneys general from 19 other states and Pennsylvania Governor Josh Shapiro. Their lawsuit asks the court to prevent the disputed provisions from taking effect before health plans governed by the rule are offered in 2027.