Health insurance premiums for 1.7 million Californians on Obamacare will soar as federal subsidies end

https://www.latimes.com/science/story/2025-10-31/health-insurance-
premiums-for-californians-on-obamacare-soar-as-open-enrollment-begins-and-
subsidies-end

Monthly premiums for subsidized healthcare plans offered by Covered 
California — this state’s Obamacare insurance exchange — are set to rise 
by 97% on average for 2026.
The main reason for the spike is that Biden-era enhanced tax credits aimed 
at keeping premiums affordable will expire on Dec. 31, unless Republicans 
and Democrats in Washington can agree to extend them as part of a budget 
deal to reopen the federal government.
The likely fallout, for now, is many Californians will simply drop health 
insurance.
Californians renewing their public health plans or who plan to sign up for 
the first time will be in for sticker shock when open enrollment begins on 
Saturday. Monthly premiums for federally subsidized plans available on the 
Covered California exchange — often referred to as Obamacare — will soar 
by 97% on average for 2026.

The skyrocketing premiums come as a result of a conflict at the center of 
the current federal government shutdown, which began on Oct. 1: a 
budgetary impasse between the Republican majority and Democrats over 
whether to preserve enhanced, Biden-era tax credits that expanded 
healthcare eligibility to millions more Americans and kept monthly 
insurance costs affordable for existing policyholders. About 1.7 million 
of the 1.9 million Californians currently on a Covered California plan 
benefit from the tax credits.

Open enrollment for the coming year runs from Nov. 1 until Jan. 31. It’s 
traditionally the period when members compare options and make changes to 
existing plans and when new members opt in.

Only this time, the government shutdown has stirred uncertainty about the 
fate of the subsidies, first introduced during the COVID-19 pandemic and 
which have been keeping policy costs low, but will expire at the end of 
the year if lawmakers in Washington don’t act to extend them.

Californians window shopping on the exchange’s consumer homepage will have 
to make some tough decisions, said Covered California Executive Director 
Jessica Altman. The loss of the tax credits to subsidize premiums only 
adds to what can already be a complicated, time-consuming and frustrating 
process.

Even if the subsidies remained intact, premiums for plans offered by 
Covered California were set to rise by roughly 10% for 2026, due to spikes 
in drug prices and other medical services, Altman said.

https://hbex.coveredca.com/data-research/

Without the subsidies, Covered California said its members who receive 
financial assistance will see their monthly premiums jump by an additional 
$125 a month, on average, for 2026.

The organization projects that the cost increases will lead many 
Californians to simply go without coverage.

“Californians are going to be facing a double whammy: premiums going up 
and tax credits going away,” Altman said. “We estimate that as many as 
400,000 of our current enrollees will disenroll and effectively be priced 
out of the health insurance that they have today. That is a devastating 
outcome.”

Indeed, the premium spike threatens to lock out the very Americans that 
the 2010 Affordable Care Act — President Obama’s signature domestic policy 
win — was intended to help, said Altman. That includes people who earn too 
much to qualify for Medicaid but who either make too little to afford a 
private plan or don’t work for an employer that pays a portion of the 
premiums.

That’s a broad swath of Californians — including many bartenders and 
hairdressers, small business owners and their employees, farmers and farm 
workers, freelancers, ride-share drivers, and those working multiple part-
time gigs to make ends meet. The policy change will also affect 
Californians who use the healthcare system more frequently 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 at the heart of the budget stalemate have brought an estimated 
160,000 additional middle-income Californians into the system, Covered 
California said. The enhanced subsidies save members about $2.5 billion a 
year overall in out-of-pocket premium expenses, according to the exchange.

California lawmakers have tried to provide some relief from rising Covered 
California premiums by recently allocating an additional $190 million in 
state-level tax credits in next year’s budget for individuals who earn up 
to 150% of the federal poverty level. That would keep monthly premiums 
consistent with 2025 levels for a person making up to $23,475 a year, or a 
family of four bringing in $48,225 a year, and provide partial relief for 
individuals and households making slightly more.

Altman said the state tax credits will help. But it may not be enough. 
Forecasts from the Urban Institute, a nonprofit research group and think 
tank, also show a significant drop-off of roughly 400,000 enrolled members 
in Covered California.

The national outlook is even worse. The Congressional Budget Office warned 
Congress nearly a year ago that if the enhanced premium subsidies were 
allowed to expire, the ranks of the uninsured would swell by 2.2 million 
nationwide in 2026 alone — and by an average of 3.8 million Americans each 
year from 2026 to 2034.

Organizations that provide affordable Obamacare plans are preparing for 
Californians to get squeezed out of the system if the expanded subsidies 
disappear.

L.A. Care, the county’s largest publicly operated health plan, offers 
Covered California policies for 230,000 mostly lower-income people. About 
90% of the Covered California consumers they work with receive subsidies 
to offset their out-of-pocket healthcare insurance costs, said Martha 
Santana-Chin, L.A. Care’s CEO. “Unless something drastic happens … a lot 
of those people are going to fall off of their coverage,” Santana-Chin 
said.

That outcome would ripple far and wide, she said — thanks to two factors: 
human behavior and basic economics.

If more and more people choose to go uninsured, more and more people will 
resort to visiting hospital emergency rooms for non-emergency care, 
disrupting and overwhelming the healthcare system.

Healthcare providers will be forced to address the cost of treating rising 
numbers of uninsured people by raising the prices they bill to insurers 
for patients who have private plans. That means Californians who are not 
Covered California members and don’t receive other federal healthcare aid 
will eventually see their premiums spike too, as private insurers pass any 
added costs down to their customers.

But right now, with the subsidies set to end soon and recent changes to 
Medicaid eligibility requirements threatening to knock some of the lowest-
income Californians off of that system, both Altman and Santana-Chin said 
their main concern is for those who don’t have alternatives.

In particular, they are concerned about people of color, who are 
disproportionately represented among low-income Californians, according to 
the Public Policy Institute of California. Any hike in out-of-pocket 
insurance costs next year could blow the budget of a family barely getting 
by.

“$100, $150, $200 — that’s meaningful to people living on fixed incomes,” 
Altman said. “Where is that money coming from when you’re living paycheck 
to paycheck?”