Texas blocked from forcing 1.5 million people to change health plans

A Texas judge has blocked the state from dropping 1.5 million residents from their health insurance plans.

District Judge Laurie Eiserloh blocked Texas Health and Human Services from approving contracts that would drop millions from the Cook Children’s Health Plan, Driscoll Health Plan and Texas Children Health plans.

These plans were available from south Texas to the Houston area and offered Medicaid STAR and CHIP coverage to predominantly children.

The state’s new $116 billion Medicaid contract proposal was scheduled to remove the three hospital plans, impacting low-income families and forcing them to choose plans under a different provider.

Eiserloh’s temporary block order comes amid increasing concerns that the new Medicaid options could hurt overall healthcare in the state, especially for the financially needy, who often rely on STAR and CHIP coverage.

“The intended contract awards will impose significant harm and confusion on millions of Texas’ STAR & CHIP members,” Eiserloh wrote in a 10-page order.

In response to the ruling, Cook Children’s Health Care System said this will “help to ensure that our members continue to have access to the care they need, when they need it.”

Cook Children’s Health plan primarily serves Tarrant County families under Medicaid and CHIP.

While CHIP was created for children in families that earn too much to receive Medicaid but too little for private insurance, STAR is available to pregnant women, low-income children and adults.

“We would like to express our gratitude to the court for their careful consideration of this matter and for their decision in our favor,” a Cook Children’s spokesperson said in a statement. “Cook Children’s will continue to monitor the situation closely and work with all stakeholders to ensure that our Members continue to receive the best possible care.”

Newsweek has emailed the Texas Health and Human Services Wednesday afternoon for comment.

Cook Children’s Hospital originally filed a petition against the head of the Health and Human Services Commission to stop the new Medicaid contracts four months ago. The new coverage options were set to go into effect in September 2025.

“Our families are worth fighting for, and we’re going to continue to fight until the state does the right thing,” Karen Love, president of Cook Children’s Health Plan, said during a press conference in June. “The stakes are too high, and the consequences are too great to have this flawed decision set in stone. We are determined to ensure that it does not.”

Cook Children’s also accused the state agency of giving Aetna an “unfair advantage” by disclosing copies of competitors’ proposals prematurely.

The trial to decide the overall fate of Medicaid contracts in Texas is scheduled for Nov. 3, 2025, but the state could appeal the ruling or change their proposal before then.

Texas contracts with various managed care organizations, from health insurers to hospital system health plans, to administer its Medicaid and CHIP coverage.

The state has been looking to drop several of the organizations in September 2025, but the new ruling said Texas failed to follow the state code.

Under the new contracts, 43 percent of Texas STAR and CHIP members would have to switch to new health plans.

“So, for the time being, the new contracts are blocked, meaning there are no scheduled changes to the health plan options that STAR and CHIP members can choose,” Louise Norris, a health policy analyst for healthinsurance.org, told Newsweek.

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, called the decision a “huge win” for families that have health plans under the three providers.

“Over the past few months, there’s been a building fear that the dropping of these programs from the state would create an absolute mess when it came to not just finding families other plans, but also ensuring the same level of care currently being distributed to these patients would continue,” Beene told Newsweek in an email response Wednesday.

“There’s no guarantee this won’t be challenged legally again, as it very well could be. However, this decision does provide a ray of light to those currently being assisted through one of these providers that the service they’re receiving could continue after September of next year.”

For many, the judge’s block order ensures low to moderate income families have access to care that would otherwise be unaffordable, said Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group.

“This is a win for many families who would otherwise have to rely on stock-based plans like Aetna or Molina, whose primary responsibility is to shareholders, not patient care,” Thompson told Newsweek via email Wednesday.

Thompson, who lives in Fort Worth, said the Texas CHIP program and Cook Children’s were a “lifeline” for his family when his son was born at just one pound 13 ounces 13 years ago.

“These programs are built for families that cannot afford private health insurance or need Medicaid support,” Thompson said.