Attorneys General Opposed New Medicaid Funding Rule
A 24-state coalition filed a formal comment letter challenging proposed changes to Medicaid funding regulations.
Updated on Sept. 22, 2026 in Law
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Maryland Attorney General Anthony Brown led a coalition of 24 attorneys general in formally opposing a proposed federal rule that would alter how Medicaid contributions are calculated. The proposed rule would eliminate a 30-year-old safety valve that governs state-collected taxes on health insurers.
Why it matters
The coalition argues that the rule exceeds the federal legal authority granted by Congress and would create an administrative burden by requiring states to reconstruct complex financial records. Opponents claim the change imposes excessive paperwork and red tape on states managing Medicaid programs.
The proposed CMS rule seeks to penalize states by reducing Medicaid funding if they collect specific taxes from health insurers. This measure follows a 2025 federal law that established new limits on state-collected taxes and payments.
The players
Anthony Brown
He is the Attorney General of Maryland who organized the 24-state coalition against the proposed CMS rule.
Centers for Medicare & Medicaid Services
This is the federal agency responsible for proposing the rules regarding Medicaid funding and insurer tax compliance.
The details
The coalition filed a formal comment letter to protest the removal of the 30-year-old safety valve regarding Medicaid contribution criteria. If finalized, the rule may force states to reconstruct financial records dating back to mid-2025 to comply with new federal reporting requirements.
Timeline
1996 marked the establishment of the safety valve for Medicaid contributions.
2025 was the year Congress passed a law setting limits on state taxes.
Mid-2025 is the period for which states may need to reconstruct financial records.
September 21, 2026, was when Attorney General Brown announced the filing of the letter.
Political Context
The attorneys general coalition challenges the rule on the grounds that it oversteps the authority granted by the 2025 federal law limiting state-collected taxes. Opponents argue this represents an unwarranted federal intrusion into state financial sovereignty.
The proposed rule could disrupt state budget planning and Medicaid administration if it forces significant changes to financial record-keeping. Residents may see indirect impacts if state healthcare programs face funding volatility due to these new federal tax and payment limitations.
The takeaway
This dispute highlights the ongoing tension between federal oversight and state-level control of complex Medicaid financial systems. States and advocacy groups will continue to watch whether these regulatory shifts survive the upcoming federal administrative review process.
What happens next
The rule is expected to undergo a standard public comment period before federal regulators determine if it will potentially take effect.
Further reading
For broader insights on this regulatory challenge, visit the Law section.
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