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A coalition of 19 Democratic-led states and Washington, D.C., has filed suit to block what they describe as a federal attempt to strong-arm hospitals into abandoning gender-affirming care for minors by threatening their access to Medicare and Medicaid dollars.
According to Reuters reports, the lawsuit targets the U.S. Department of Health and Human Services and Secretary Robert F. Kennedy Jr., and was filed in federal court in Oregon.
The legal challenge lands days after Kennedy and the Trump administration unveiled a multipronged crackdown on youth transgender health care.
On December 18, Kennedy issued a “declaration” asserting that certain medical and surgical treatments for minors diagnosed with gender dysphoria carry an “unfavorable risk-benefit profile,” and HHS announced proposed rules that would bar hospitals providing such care from participation in Medicare and Medicaid, while also restricting Medicaid and the Children’s Health Insurance Program (CHIP) from covering gender-affirming care for minors.
State attorneys general argue the move is not just policy, it is leverage. Their core claim is that Kennedy cannot “unilaterally change medical standards by posting a document online,” and that the federal government is sidestepping the legal process required to reshape health policy.
The states warn that the threat alone can chill care immediately, pushing providers to stop treating transgender adolescents out of fear of being cut off from federal programs that keep hospitals financially afloat.
That financial pressure point is the entire mechanism. Medicaid and Medicare are woven into virtually every hospital’s balance sheet, and federal funding represents a large share of overall hospital spending.
KFF, the nonprofit health policy research organization, has estimated federal funding accounts for roughly 45% of total spending on hospital care, a figure repeatedly cited by opponents as proof that the administration’s plan functions like a de facto national ban even in states where gender-affirming care remains lawful.
Kennedy’s posture collides with the position of major U.S. medical associations. The American Academy of Pediatrics and the American Medical Association endorse gender-affirming care as part of evidence-based treatment, emphasizing decisions made by patients, families, and clinicians rather than politicians.
The administration, for its part, has framed the policy as child protection and has used charged language, branding care for transgender youth as “sex-rejecting procedures” and casting providers as out of compliance with medical standards.
Beyond the courtroom, the lawsuit escalates a broader political campaign aimed at erasing transgender people from public life through federal power.
Reuters reports the administration has pursued actions to bar transgender people from military service, constrain passport gender markers, and restrict bathroom access for federal workers, part of a wider effort Trump allies describe as rolling back “gender ideology,” a phrase LGBTQ advocates have long argued is used to stigmatize and dehumanize trans people.
The stakes are not abstract. Reuters, citing Komodo Health’s analysis of U.S. health data, reported more than 121,000 children ages 6 to 17 were diagnosed with gender dysphoria between 2017 and 2021, with 17,683 starting puberty blockers or hormone therapy, numbers the outlet noted are likely undercounts.
If the proposed rules take effect, access could shrink sharply even in states that have tried to protect care through insurance mandates and state policy, because hospitals cannot easily replace Medicare and Medicaid revenue.
For now, the administration’s restrictions are still proposals, subject to public comment periods before finalization.
But the lawsuit signals what may define the next phase of the fight: blue-state attorneys general treating federal health funding as a civil rights battlefield, and a Trump administration willing to turn the machinery of federal reimbursement into a weapon against trans kids and the doctors trying to keep them safe.
