Just days before new rules were set to take effect, a federal judge on Friday froze key parts of the U.S. Health and Human Services Department’s planned overhaul of the Affordable Care Act marketplace.
Baltimore-based U.S. District Judge Brendan Hurson ruled in favor of a challenge brought by Chicago, Baltimore’s mayor and city council, and public health advocates, arguing the planned changes could cost over 2 million people their health insurance through higher fees and added obstacles.
Hurson temporarily blocked nearly all provisions of the challenged Marketplace Integrity and Affordability Rule, halting its rollout until he issues a final decision. The suspended measures include higher fees and heightened scrutiny for low-income applicants, which had been slated to take effect on August 25.
Finalized in June by the Centers for Medicare & Medicaid Services, the rule includes measures aimed at curbing improper enrollments and preventing the misuse of federal funds, CMS said.
The Affordable Care Act — the landmark domestic achievement of Democratic President Barack Obama — established health insurance marketplaces operated by private insurers such as UnitedHealth Group (UNH.N) and CVS (CVS.N)-owned Aetna, offering income-based subsidies. Enrollment hit a record 20.8 million people in 2024.
President Donald Trump’s first term included a failed push to roll back Obamacare.
In Friday’s ruling, Hurson noted that the states presented sufficient evidence suggesting that certain provisions of the rule may conflict with the Affordable Care Act, widely known as Obamacare.
Chicago Mayor Brandon Johnson lauded the ruling, saying in a statement that it will “help our residents obtain reasonably priced health insurance and reduce the burden on our health clinics to provide free care.”
An HHS spokesperson said the agency does not comment on ongoing litigation.
Health insurer stocks surged in afternoon trading, led by Elevance (ELV.N), which rose 2.5%, followed by Centene (CNC.N) up 2.25%, Cigna (CI.N) up 2.3%, Molina (MOH.N) up 2%, and UnitedHealth up 1.3%.
Health insurers have faced mounting challenges with rising medical costs in their ACA plans in recent months, partly driven by members increasing their use of services ahead of potential coverage dropouts in 2026.
On July 1, the cities filed a lawsuit against the rule, arguing that it conflicted with the Affordable Care Act and had been improperly enacted.
A coalition of Democratic attorneys general has filed a separate lawsuit seeking to block portions of the rule, which remains pending.
For 2025, insurers are seeking the largest premium hikes for Obamacare plans since 2018, citing expectations of a smaller, less healthy pool of enrollees, according to analysis by health research firm KFF.
