Vermont Wins Ruling Blocking Medicaid Cut Over Gender Care

Vermont Attorney General Charity Clark won a federal court ruling Saturday blocking a Trump administration rule that would have cut Medicaid and Medicare funding to hospitals providing gender-affirming care to minors.

Oregon federal judge Mustafa T. Kasubhai issued the written opinion, siding with Clark and an Oregon-led coalition of attorneys general from 20 states and Washington, D.C. The ruling effectively prevents the federal government from withholding hospital funding as a mechanism to restrict care that multiple states, including Vermont, have explicitly protected by law.

The case traces back to December, when U.S. Health and Human Services Secretary Robert F. Kennedy Jr. announced a proposed rule that would completely withdraw Medicaid and Medicare funds from any hospital offering gender-affirming care to young people. Kennedy’s office the same day released a declaration calling such procedures “neither safe nor effective,” a position that puts his department at odds with the American Medical Association and the American Academy of Pediatrics, both of which support this care for minors.

Clark joined the Oregon-led multistate coalition just days after Kennedy’s December announcement. The lawsuit moved quickly. Kasubhai issued an oral ruling last month granting summary judgment, a legal finding that the facts aren’t in genuine dispute and the case doesn’t need a full trial. Saturday’s written opinion formalized that result.

The judge didn’t mince words.

“Unserious leaders are unsafe,” Kasubhai wrote. “Tragically, this case is one of a long list of examples of how a leader’s wanton disregard for the rule of law causes very real harm to very real people.” He also found that Kennedy didn’t have the legal authority to unilaterally publish a document revising standards of care.

For Vermont specifically, the proposed rule would have conflicted directly with the state’s 2023 shield laws, which protect both providers and patients who receive gender-affirming care. Clark framed Saturday’s outcome as part of a continuing legal effort.

“This decision is a victory in our ongoing fight for bodily autonomy and the rights of transgender youth,” Clark said in a statement Monday. “We will continue to fight to ensure that gender-affirming care remains safe, effective, and protected.”

Vermont Health Commissioner Rick Hildebrant had signaled a similar posture in December, writing that the state would “continue to support providers and work to preserve access to care for vulnerable Vermont communities, regardless of any potential federal changes.”

Vermont’s legal position now aligns with its infrastructure. The University of Vermont Medical Center’s Transgender Youth Program is among the state’s established providers, and VTDigger has reported that Vermont is increasingly positioned as a destination for patients seeking this care from other states where access has narrowed. That dynamic has broader Upper Valley implications. Dartmouth Health, which operates across both New Hampshire and Vermont under the Dartmouth Health system, serves patients from across the region, and access questions in one state routinely affect care patterns in the other.

The multistate lawsuit is one of dozens of legal challenges filed by Democratic attorneys general against Trump administration health and social policy rules since January 2025. Courts have blocked several on procedural grounds, including findings that executive agencies overstepped their statutory authority. Kasubhai’s ruling fits that pattern. The Administrative Procedure Act, the federal law governing how agencies write and publish rules, sets specific notice and comment requirements that courts have used to limit unilateral agency action. Kasubhai found Kennedy’s declaration fell outside his legal lane entirely.

Clark’s office hasn’t said whether it expects the Trump administration to appeal. Federal agencies have 60 days to appeal a district court ruling to the Ninth Circuit. If the administration does appeal, the blocking order would likely remain in place while the higher court considers the case, meaning hospitals in Vermont and across the coalition’s 20 states can continue operating under current standards for now.