Salem, Oregon – A fight over who gets to decide what Medicaid covers is heading back to court, with Oregon Attorney General Dan Rayfield arguing that the federal government is stepping into decisions historically left to states, doctors and families.
Rayfield joined a multistate coalition in suing the Trump administration over a new federal rule that would block Medicaid and Children’s Health Insurance Program funding for gender-affirming care provided to certain low-income children and young adults.
“Freedom means very little if the government can reach into your family’s private decisions and take it away,” said Attorney General Rayfield.
“Our office will continue to do everything we can to defend the right to keep these medical choices between patients, families and their doctors.”
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The lawsuit challenges action by the U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services. The coalition argues that since Medicaid and CHIP were established in the 1960s, states have been allowed to determine covered services within limits set by Congress.
According to the states, the new rule breaks with that framework by preventing federal reimbursement for gender-affirming treatment for Medicaid patients under 18 and CHIP patients under 19. The coalition also argues that the same treatments can remain covered when provided to other young patients for different medical purposes.
HHS first proposed the restriction in December 2025. More than 30,000 public comments followed, with more than 90% opposing the proposal, according to Rayfield’s office. Those objections included comments submitted by Rayfield and other state attorneys general.
HHS nevertheless finalized the rule earlier this month. It is scheduled to take effect Oct. 13, 2026.
The states contend that the policy goes beyond the authority Congress granted federal health agencies and could create a broader precedent allowing the executive branch to replace individual medical judgment with blanket coverage restrictions.
For Rayfield, the latest case is his third lawsuit challenging federal actions involving gender-affirming healthcare. Courts blocked an HHS effort in March 2026 that threatened Medicare and Medicaid funding for hospitals providing such care. In August, another court struck down a rule removing the treatment from Affordable Care Act essential health benefits. Oregon law separately protects access to the care.
Rayfield is joined by attorneys general from 20 other states and the District of Columbia, along with Pennsylvania Gov. Josh Shapiro, bringing the coalition to 22 jurisdictions seeking to stop the rule before it takes effect.
