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A coalition of 22 US states is suing the Trump administration over new federal restrictions on funding for gender-affirming healthcare for transgender young people.
The lawsuit, announced on 2 September, challenges a final rule from the Centers for Medicare & Medicaid Services that would prevent federal Medicaid money from being used for certain gender-affirming treatments for people under 18.
Similar restrictions would apply to federal funding through the Children’s Health Insurance Program, or CHIP, for people under 19.
What changes under the new transgender healthcare rule?
The CMS rule is scheduled to take effect on 13 October 2026.
It prevents federal Medicaid funding from paying for puberty blockers, hormone treatments and certain surgical procedures when provided for gender transition to people under 18.
For CHIP, the restriction applies to those under 19.
Young people already receiving hormone treatment may have federal funding continue for a transition period of up to six months. Mental health services are not included in the funding restriction.
The administration uses the term “sex-rejecting procedures” in the regulation. Gender-affirming care is the terminology commonly used by many healthcare providers and LGBTQ+ organisations.
Why are 22 states suing?
The states argue that the federal government is exceeding its legal authority.
Their case centres partly on how Medicaid has traditionally worked: although the programme is jointly funded by federal and state governments, states have significant authority to decide which medical services they cover within limits established by Congress.
The coalition argues that HHS and CMS cannot simply create a new national exclusion for one category of treatment without clear authority from Congress.
Connecticut Attorney General William Tong, Massachusetts Attorney General Andrea Campbell and Illinois Attorney General Kwame Raoul are among those leading the challenge.
The Trump administration strongly defends the restrictions
The administration argues that the treatments should not receive federal funding because it believes the available evidence does not sufficiently demonstrate their benefits for young people and that some interventions may have irreversible consequences.
CMS has pointed to international reviews, including the Cass Review in England, when defending its approach.
The states challenging the rule take a very different view, arguing that decisions about medically necessary treatment should remain with patients, families, doctors and state healthcare authorities.
Another major battle over trans rights in America
The lawsuit is the latest in a growing series of legal battles between the Trump administration and Democratic-led states over transgender rights.
Education, school sport, identity documents and gender-affirming healthcare have all become major areas of confrontation.
The significance of this case goes beyond the treatment itself.
Medicaid provides healthcare to millions of low-income Americans. If the federal rule survives the legal challenge, transgender young people covered by the programme could face significantly different access to care depending on where they live and whether states find alternative ways to fund treatment.
For now, the rule is due to take effect on 13 October.
The courts may decide whether it ever gets that far.
