Californians renewing their public health plans or planning to sign up for the first time will be in for a shock when open enrollment begins Saturday. Monthly premiums for federally subsidized plans available through the Covered California exchange (often called Obamacare) will increase by an average of 97% in 2026.
The skyrocketing premiums are the result of a conflict at the heart of the current federal government shutdown that began Oct. 1: a budget impasse between the Republican majority and Democrats over whether to maintain expanded Biden-era tax breaks that expanded health care eligibility for millions of Americans and kept monthly insurance costs affordable for existing policyholders. About 1.7 million of the 1.9 million Californians currently covered by Covered California receive the tax credit.
Open registration for next year will run from November 1st to January 31st. Traditionally, this is the period when participants compare options and make changes to existing plans, as well as when new participants agree.
Only this time, the government shutdown has raised uncertainty about the fate of subsidies first introduced during the COVID-19 pandemic that have kept policy spending low but are set to expire at the end of the year unless lawmakers in Washington act to extend them.
Californians window shopping at the Stock Exchange consumer home page some tough decisions will have to be made, said Covered California executive director Jessica Altman. The loss of tax credits to subsidize premiums only makes an already complex, time-consuming and frustrating process even worse.
Even if subsidies remained unchanged, premiums for plans offered by Covered California were expected to rise about 10% in 2026 due to price hikes for drugs and other health care services, Altman said.
Without the subsidies, Covered California said its members receiving financial assistance would see their monthly premiums rise by an average of $125 per month on average in 2026.
The organization predicts that rising costs will lead to many Californians going uninsured.
“Californians are in for a double whammy: premiums will rise and tax breaks will disappear,” Altman said. “We estimate that approximately 400,000 of our current members will opt out and effectively lose the health insurance they have today. This is a devastating outcome.”
Indeed, the jump in premiums threatens to lock out the very Americans the 2010 Affordable Care Act, President Obama's signature domestic policy victory, was intended to help, Altman said. This includes people who earn too much to qualify for Medicaid, but either earn too little to afford a private plan or do not work for an employer that pays part of the premiums.
This is a wide range of Californians, including many bartenders and barbers, small business owners and their employees, farmers and farmworkers, freelancers, rideshare drivers and those who work multiple part-time jobs to make ends meet. The policy change will also impact Californians who use the health care system more often because they have ongoing conditions that are costly to treat.
By raising the tax credit eligibility threshold to include Americans earning more than 400% of the federal poverty level, the Biden-era subsidies that caused the budget impasse have brought about 160,000 additional middle-income Californians into the system, according to Covered California. The expanded subsidies save members overall about $2.5 billion a year in premium costs, according to the exchange.
California lawmakers have attempted to mitigate the impact of rising insurance premiums in California by recently appropriating additional $190 million in state tax breaks in next year's budget for people who earn up to 150% of the federal poverty level. It would keep monthly premiums at 2025 levels for an individual earning up to $23,475 a year or a family of four earning $48,225 a year, and would provide partial relief for individuals and households earning slightly more.
Altman said state tax breaks will help. But this may not be enough. Projections from the Urban Institute, a nonprofit research group and think tank, also show a significant decrease of approximately 400,000 enrolled members in Covered California.
The national outlook is even worse. Congressional Budget Office warned Congress almost a year ago that if the expanded premium subsidies expire, the ranks of the uninsured would increase by 2.2 million nationwide in 2026 alone—and by an average of 3.8 million Americans each year from 2026 to 2034.
The organizations that provide affordable Obamacare plans are preparing to push Californians out of the system if the expanded subsidies disappear.
LA Care, the county's largest public health plan, offers Covered California policies to 230,000 people, mostly low-income. According to Martha Santana-Chin, CEO of LA Care, about 90% of Covered California consumers they work with receive subsidies to offset their out-of-pocket health insurance costs. “Unless something drastic happens … a lot of these people are going to lose their coverage,” Santana-Chin said.
This result will spread far and wide, she says, thanks to two factors: human behavior and economic fundamentals.
If more and more people drop their insurance, more and more people will resort to visiting hospital emergency rooms for non-emergency care, disrupting and overburdening the healthcare system.
Health care providers will be forced to offset the costs of treating a growing number of uninsured people by increasing the prices they charge insurers for patients with private plans. That means Californians who aren't Covered California members and don't receive other federal health care will also end up seeing their premiums rise sharply as private insurers pass on any additional costs to their customers.
But right now, with subsidies about to end and recent changes to Medicaid eligibility requirements looming, kick some of the lowest-income Californians out of the system.Both Altman and Santana-Chin said their main concern is for those who have no alternative.
In particular, they are concerned about people of color who disproportionately represented Among low-income Californians, according to the Public Policy Institute of California. Any increase in insurance costs next year could wreak havoc on a family struggling to make ends meet.
“$100, $150, $200 — that’s important for people living on a fixed income,” Altman said. “Where does this money come from when you live paycheck to paycheck?”
