Last year, Maryland Del. Lesley Lopez sponsored a new state law she described at the time as “a groundbreaking, first-in-the-nation program to secure access” to abortion by redirecting millions in unused funds.

But, before a dollar could be distributed, federal health officials called use of the money impermissible and squashed the program last month, setting off a scramble to save the funding.

Lopez, a Montgomery County Democrat, had planned to use leftover money from policies sold on the state’s health exchange on those who were uninsured or traveling to the state for abortions under the new Public Health Abortion Grant Program.

In an interview last week, Lopez said she believes there is a “proper solution” and is working with insurance regulators in the state.

“I’m confident we have the leadership and vision to achieve the original goal,” she said.

The money, about $25 million, comes from a mandatory $1-per-month fee for every policy sold on Maryland’s health exchange for use by enrollees seeking abortions.

It’s far more than has been needed, and the money is now accumulating in health insurer accounts by about $3 million a year, state reports show.

Maryland insurance regulators received a letter in December from federal health officials who said the program “exceeds permissible use” of the fees collected on Affordable Care Act policies.

The money would have gone to abortion providers and groups such as the Abortion Fund of Maryland, which has reported straining to meet demand from women within the state and from other states.

The group reported a 24% increase in requests in 2025 from the year before, and 40% of requests were coming from out-of-state residents.

The group helps pay for the procedures and related costs, such as transportation, lodging, meals and child care. Officials estimated they spent about $780,000 last year on 2,500 people but had to begin limiting the hours they accepted calls because they lacked funding.

“These grant funds would be transformative — expanding access to abortion care for Marylanders while strengthening our state’s role as a critical lifeline for people forced to travel for care,“ said Lynn McCann-Yeh, the co-executive director of the Abortion Fund of Maryland.

”Demand for financial assistance for abortion care remains consistently high, underscoring the urgent need for sustained state investment in our network of clinics, providers and support organizations.”

News of the federal intervention was announced along with other measures by the U.S. Department of Health and Human Services to coincide with last month’s National Right to Life March in Washington.

The release said Health Secretary Robert F. Kennedy Jr. was announcing actions aimed to “safeguard federal health care provider conscience rights and protect the dignity of human life.”

That included a directive to the Maryland Insurance Administration to cancel the abortion grant program “to ensure full compliance with federal law.” Agency officials said that was sufficient to trigger a clause in the Maryland law to “sunset.”

Federal officials pointed to the provision in the ACA restricting use of federal funds for abortions, though their specific objection was unclear.

The money includes no federal funds by design. The funds were created with the Affordable Care Act specifically to keep the $1 fees separate from premiums that may contain federal subsidies.

In her testimony last year, Lopez said the accounting was purposefully made difficult but insurers figured out how to use the fees to provide abortion coverage in states that allowed it or, as in Maryland, required it.

It’s not clear how Lopez and insurance regulators would design any new legislation during the current 90-day General Assembly session or how a revision could pass federal muster.