President Donald Trump is facing another major legal challenge after 25 states and the District of Columbia filed a lawsuit against his administration’s new Medicaid work requirements. The case could impact millions of Americans enrolled in the government healthcare program while reigniting a national debate over welfare reform, taxpayer-funded benefits, and efforts to reduce fraud.
The lawsuit challenges an Interim Final Rule (IFR) issued by the Centers for Medicare & Medicaid Services (CMS), arguing that the policy unlawfully limits access to Medicaid coverage and conflicts with the intent of federal law. Supporters of the rule, however, say it is designed to strengthen the program by ensuring benefits are reserved for those who truly qualify.
Why 25 States Are Suing the Trump Administration
The coalition, made up primarily of Democratic-led states, claims the new CMS rule creates unnecessary barriers for Medicaid recipients who suffer from serious medical conditions.
Under the rule, certain recipients seeking an exemption from Medicaid work requirements must submit documentation proving they are medically unable to work, volunteer, or attend school.
Before the rule was introduced in June, many individuals with severe medical conditions were expected to receive automatic exemptions based on existing medical records. State agencies could verify eligibility using information already on file without requiring recipients to complete additional paperwork before the work requirements begin in January 2027.
The lawsuit argues that the new documentation requirements could cause eligible Americans to lose healthcare coverage simply because of paperwork issues rather than because they fail to qualify.
What the New Medicaid Rule Requires
The Trump administration’s policy generally requires able-bodied adults receiving Medicaid benefits to meet one of several participation requirements in order to maintain coverage.
Recipients would generally need to:
- Work at least 20 hours per week
- Volunteer in approved programs
- Participate in educational or job-training activities
Individuals with qualifying medical conditions may receive exemptions, but under the new policy they must provide documentation demonstrating their eligibility.
Administration officials say these changes are intended to improve accountability, reduce fraud, and preserve Medicaid for Americans who genuinely need assistance.
Dr. Mehmet Oz Defends the Policy
The lawsuit names CMS Administrator Dr. Mehmet Oz and Health and Human Services Secretary Robert F. Kennedy Jr. as defendants.
Dr. Oz has repeatedly defended the administration’s approach, arguing that Medicaid should remain financially strong for future generations while encouraging able-bodied recipients to contribute to society.
“If you can work, you should get up and work,” Oz said while explaining the policy.
He also emphasized that stronger oversight is necessary to protect taxpayer-funded healthcare programs from abuse.
Oz said that implementing stronger safeguards would help keep Medicaid and Medicare sustainable for the long term. He added that President Trump has made clear he supports both programs, but argued they must be protected from fraud and abuse to ensure they remain financially stable and able to serve those who depend on them.
Supporters of the administration argue that work requirements encourage self-sufficiency, protect taxpayer dollars, and help ensure Medicaid resources remain available for seniors, children, people with disabilities, and those facing legitimate medical hardships.
Critics Warn Millions Could Lose Coverage
The coalition of states argues the rule could have significant unintended consequences.
According to the lawsuit, CMS estimates approximately 2.3 million Medicaid recipients could lose coverage during the first year after the new requirements take effect.
The filing also cites agency projections estimating that roughly 7% of recipients who are working or already qualify for exemptions could still lose their benefits because of missed paperwork deadlines, documentation errors, or confusing reporting requirements.
The lawsuit states:
“People with disabilities, patients in the middle of cancer treatment, or those struggling with another serious or complex health condition shouldn’t be at risk of losing the care that helps maintain their health.”
Beginning in 2028, recipients without up-to-date medical records on file would generally receive one opportunity to submit a sworn self-attestation declaring they are medically unable to work. Previous guidance allowed recipients to submit updated self-attestations multiple times as their medical conditions changed.
The plaintiffs also argue the rule would require states to replace automated verification systems with more expensive and labor-intensive manual review processes, increasing administrative costs.
Which States Joined the Lawsuit?
The lawsuit was filed by:
- California
- Connecticut
- Delaware
- Hawaii
- Illinois
- Maine
- Maryland
- Massachusetts
- New Jersey
- New York
- Oregon
- Rhode Island
- Vermont
- Washington
- Arizona
- Colorado
- Michigan
- Minnesota
- Nevada
- New Mexico
- North Carolina
- Pennsylvania
- Virginia
- Wisconsin
- Kentucky
- The District of Columbia
What Happens Next?
With an August 31 deadline approaching for states to notify Medicaid recipients about the upcoming changes, the plaintiffs are asking a federal court to issue a temporary restraining order and preliminary injunction that would prevent CMS and HHS from enforcing the rule while the legal challenge moves forward.
The case is expected to become one of the most closely watched healthcare battles facing the Trump administration.
Supporters argue the new Medicaid work requirements are a commonsense effort to protect taxpayer dollars, reduce fraud, and strengthen the long-term future of the program. Opponents contend the documentation requirements could unintentionally strip healthcare coverage from eligible Americans because of bureaucratic hurdles rather than actual ineligibility.
The court’s decision could ultimately shape how Medicaid work requirements are enforced nationwide and determine whether the Trump administration’s broader effort to reform taxpayer-funded healthcare programs can move forward as planned.