After a period when New Jersey sometimes seemed content to rely on protections already won, the state is again becoming an active defender of transgender rights — this time joining a federal lawsuit aimed at stopping the Trump administration from stripping Medicaid funding from gender-affirming care for young people.
For a while, New Jersey’s status as a safe state for transgender people could feel almost static.
The protections were there. Anti-discrimination law was there. The state had declared itself a safe haven for gender-affirming healthcare. But while other states and the federal government escalated their attacks on transgender people, New Jersey sometimes seemed to be defending what it already had rather than aggressively pushing back.
That is increasingly difficult to say now.
On September 2, New Jersey joined a coalition of attorneys general challenging a Trump administration rule that would eliminate federal Medicaid reimbursement for certain forms of gender-affirming healthcare provided to transgender adolescents.
And it is becoming part of a pattern.
In a matter of weeks, New Jersey has helped fight federal efforts to exclude gender-affirming care from Affordable Care Act protections, strengthened its own shield laws protecting patients and providers, challenged ideological restrictions on federal healthcare funding, and now joined the latest battle over Medicaid.
New Jersey is not simply calling itself a safe state anymore.
It is increasingly acting like one.
The federal government wants Medicaid out of trans healthcare
The new Centers for Medicare & Medicaid Services rule was finalized in August and is scheduled to take effect October 13.
It prohibits federal Medicaid reimbursement for puberty-suppressing medication, hormone therapy and certain surgical care when those treatments are provided to treat gender dysphoria for patients under 18. Similar restrictions apply to the Children’s Health Insurance Program, or CHIP, for patients under 19.
The Trump administration describes those treatments using the politically loaded phrase “sex-rejecting procedures” and argues that federal taxpayers should not be required to fund them. HHS Secretary Robert F. Kennedy Jr. has claimed the treatments lack adequate evidence of benefit and carry unacceptable risks.
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But there is an important distinction behind the rhetoric:
The rule does not make those medications illegal. It does not even categorically exclude those medications from Medicaid.
Instead, federal reimbursement disappears depending upon why the medication is being prescribed.
A puberty-blocking medication could still receive federal reimbursement when prescribed for conditions such as precocious puberty. Hormones could continue being covered for other medical diagnoses.
The prohibition kicks in when those same treatments are used for gender dysphoria.
That distinction sits at the heart of the states’ lawsuit.
New Jersey says CMS does not get to make that decision
New Jersey joined California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, Wisconsin and the District of Columbia in the lawsuit, along with Pennsylvania Gov. Josh Shapiro.
The case, State of Illinois et al. v. Department of Health and Human Services et al., was filed September 2 in the U.S. District Court for the District of Massachusetts.
The coalition argues that Congress created Medicaid and CHIP as federal-state partnerships in which states retain substantial authority to determine what medically necessary services their programs cover.
According to the complaint, CMS is attempting to seize that authority for itself and create a nationwide exclusion Congress never authorized.
The states argue that the agency has usurped state medical-necessity decisions by declaring that federal money cannot reimburse particular treatments specifically when those treatments are provided to transgender adolescents.
There is another especially important piece of the states’ argument.
Congress has considered restricting Medicaid funding for gender-affirming healthcare.
It did not ultimately enact that restriction.
An earlier version of the massive federal reconciliation law commonly called the “One Big Beautiful Bill” included restrictions on Medicaid and CHIP funding for gender-transition care. That provision did not survive into the final law. A separate effort in Congress to prohibit Medicaid payment for certain gender-transition treatments also failed.
The states contend HHS is now trying to accomplish administratively what Congress declined to put into law.
That is not merely a debate about transgender medicine.
It is a separation-of-powers argument.
Congress writes the law. Agencies administer it.
The states say CMS cannot manufacture congressional authority simply because the administration did not get the policy it wanted from Congress.
And the people hit hardest would be those with the least money
The administration’s rule is sometimes described as a “ban on gender-affirming care.”
Technically, it is narrower than that.
States could continue paying for gender-affirming treatment using state-only money outside federally matched Medicaid or CHIP funding. The rule also provides up to a six-month transition period for some patients already receiving hormone therapy.
But that does not make the consequences insignificant.
Medicaid exists specifically to provide healthcare to people who may otherwise struggle to afford it.
That means the administration has chosen to attack transgender healthcare through a program serving low-income families.
Families with money may have private insurance, pay out of pocket or travel.
Families relying on Medicaid have fewer options.
The coalition argues the result will either force states to shoulder costs that were previously shared with the federal government or force patients to lose access to care their doctors and state healthcare systems consider medically necessary.
And despite the administration’s repeated suggestion that its position represents settled medical science, major American medical organizations continue to oppose political bans on gender-affirming healthcare.
The American Academy of Pediatrics has opposed federal restrictions that intrude on the patient-physician relationship and supports access to comprehensive, developmentally appropriate care for transgender and gender-diverse youth. The Endocrine Society likewise continues to support medically supervised gender-affirming treatment while recognizing the need for continued long-term research.
New Jersey has been here before — and recently won
This is also not New Jersey’s first confrontation with the Trump administration over transgender healthcare.
New Jersey was part of a multistate challenge to a December 2025 declaration from Kennedy that attempted to establish federal standards declaring certain gender-affirming treatments for minors unsafe and ineffective.
A federal judge sided with the states in April, finding that Kennedy had exceeded his statutory authority and blocking the declaration.
Then, in August, New Jersey helped secure another victory when a federal court struck down part of a Trump administration rule attempting to exclude certain gender-affirming treatments from the Affordable Care Act’s essential-health-benefit framework.
Five days later, Gov. Mikie Sherrill signed legislation expressly adding gender-affirming care to New Jersey’s healthcare shield protections.
That law limits New Jersey’s cooperation with hostile out-of-state investigations, protects certain patient information and helps shield healthcare professionals from professional retaliation for providing care that is legal here.
Attorney General Jennifer Davenport put the state’s position plainly at the signing:
“New Jersey is committed to protecting bodily autonomy and access to medical care for all.”
Now New Jersey is carrying that position back into federal court.
A state rediscovering its voice
New Jersey did not suddenly become a trans-friendly state in 2026.
Its Law Against Discrimination already protects gender identity and expression. Former Gov. Phil Murphy’s Executive Order 326 established New Jersey as a safe haven for people seeking gender-affirming healthcare and directed state agencies to protect patients and providers from certain out-of-state actions.
Those protections mattered.
But protections can stagnate when governments begin treating them as accomplishments rather than responsibilities.
A safe-haven declaration means less if providers can be frightened into abandoning patients.
A nondiscrimination statute means less if Washington can selectively make care unaffordable.
And calling New Jersey a sanctuary means considerably less if the state is unwilling to fight when the federal government comes looking for ways around those protections.
Recently, New Jersey has been fighting.
Not perfectly. Not always first.
But repeatedly.
The Sherrill administration and Attorney General Davenport increasingly appear willing to use New Jersey’s regulatory authority, legislative power and standing in federal court rather than simply issue statements condemning what Washington is doing.
That distinction matters.
Because the fight over transgender rights has changed.
The federal strategy is no longer limited to asking whether a state can ban care outright. It increasingly uses funding conditions, insurance regulation, federal grants and administrative rules to make providing that care financially or legally dangerous.
Those attacks require states willing to do more than declare themselves welcoming.
They require states willing to push back.
New Jersey appears to have remembered that.
Why It Matters
The Medicaid rule is particularly consequential because it creates two standards for the same medicine.
A medication can remain federally reimbursable for a cisgender child while becoming ineligible for federal reimbursement when prescribed to a transgender child for gender dysphoria.
The Trump administration says that distinction is based on medical purpose rather than transgender status.
New Jersey and the other plaintiffs say CMS lacks the authority to impose it in the first place.
The federal court will ultimately decide that legal question.
But something else has already become clearer here at home.
New Jersey spent years building a reputation as one of the safer states in America for transgender people.
Now, faced with a federal government determined to test how much those protections actually mean, the Garden State is beginning to demonstrate that being a safe state cannot simply be a label.
Sometimes it means becoming a shield.
And sometimes it means becoming a sword.
Read More
- New Jersey Joins Lawsuit Against Anti-Trans Conditions on Title X Grants
- Mount Sinai Abandons Its Young Trans Patients, Agrees to End Gender-Affirming Care
- HHS Turns Anti-Trans Report Into Federal Referral List for DOJ Investigations
- DOJ Forces Third Children’s Hospital to End Trans Youth Care as Federal Pressure Campaign Expands