Attorney General James Sues Trump Administration to Protect Medicaid Coverage for Vulnerable New Yorkers

New Federal Rule Could Strip Health Coverage from New Yorkers with Serious Medical Conditions, Disabilities, Mental Health Needs, and Substance Use Disorders

New York Estimates 475,000 Medicaid Recipients Could Lose Coverage Under Federal Work Requirements

New York Attorney General Letitia James today joined a coalition of 24 other states and the District of Columbia in suing the Trump administration over a new federal rule that threatens to take health care away from vulnerable Medicaid recipients.  The rule, issued by the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS), creates new barriers that will force many New Yorkers with serious health conditions, disabilities, mental health needs, and substance use disorders to prove they are sick enough to keep their health insurance.  Attorney General James and the coalition are asking the court to block restrictive provisions of the rule and protect access to health care for New Yorkers and Medicaid recipients nationwide.

“New Yorkers who are battling cancer, living with a disability, managing a serious mental health condition, or recovering from addiction should be able to get the health care they need without being buried in paperwork,” said Attorney General James.  “This rule would create needless barriers for some of our most vulnerable neighbors and put thousands of New Yorkers at risk of losing lifesaving health coverage.  My office will always fight to protect Medicaid and ensure that every New Yorker can get the care they need.”

New York’s Medicaid program covers approximately 6.4 million people, including children, families, older adults, people experiencing homelessness, people with disabilities, and people with serious health conditions.  Approximately 1.9 million New Yorkers – nearly 30 percent of all New York Medicaid members – are low-income adults who could be affected by new work requirements and more frequent eligibility checks.  In the last state fiscal year, approximately $17.5 billion in federal Medicaid funding supported health coverage for these New Yorkers.

In 2025, Congress enacted the so-called “One Big Beautiful Bill Act,” which imposed new work requirements on some adults who receive Medicaid.  In that law, Congress explicitly protected some “medically frail” people from those requirements, including people with substance use disorders, serious mental health conditions, disabilities, and serious or complex medical conditions.  When the Trump administration introduced its plan to implement the law, however, it went a step further – blindsiding states that had been in touch with CMS to develop implementation plans for months.  Under the administration’s new rule, many medically vulnerable people must prove to the government in new ways that their condition makes it significantly harder for them to work or meet the new requirements.  This new standard was not included in the law, and it was not part of prior federal guidance to states.  As a result, people who should be protected under the law may lose coverage because they cannot get through the administrative barriers to prove they qualify.

Attorney General James and the coalition argue the new rule will make it harder for states to automatically identify Medicaid members who should be protected.  Under the rule, the state may need more than a diagnosis to confirm that someone is medically vulnerable, including additional information about how severe their condition is or what care they receive.  That information may not be available for many Medicaid members, which means fully eligible recipients could be forced to submit extra paperwork, call the state for help, or appeal a denial just to keep their health care.  Some may lose coverage altogether if they cannot obtain the required paperwork.

In New York, the new work requirements are expected to have a profound impact.  The New York State Department of Health (DOH) estimates that at least 475,000 New Yorkers could be kicked off Medicaid due to the combined impact of work requirements and more frequent eligibility checks.  The DOH also estimates that New York’s uninsured population could increase by up to 45 percent, from approximately 1 million people to as many as 1.45 million people after implementation.  Because the Trump administration’s rule adds even more restrictions on medically vulnerable New Yorkers, DOH expects that an even larger group of New Yorkers could lose coverage than otherwise would have under the law passed by Congress.  Unable to afford doctor visits, prescriptions, or other care, DOH anticipates these individuals may return to the program sicker and in need of more costly care, increasing costs for the state and reducing the quality of care for Medicaid recipients.

Attorney General James and the coalition argue that the rule violates the Administrative Procedure Act because it is contrary to federal law, arbitrary and capricious, and was issued without adequately considering the harm it will cause to states and Medicaid recipients.  The coalition also argue that the rule violates constitutional limits on federal spending authority by imposing unclear and shifting requirements on states after they have already spent significant time and resources preparing to implement the law based on prior federal guidance.  They are asking the court to block challenged provisions while the case proceeds and ultimately vacate them in full.

Joining Attorney General James in filing this lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia, as well as the governors of Kentucky and Pennsylvania.