Premium Increases for Covered California Plans

Health insurers have increased premiums on Covered California plans by nearly 10% for the second consecutive year, causing customer payments to rise amid a drop in enrollment of about 170,000 individuals.

Officials announced that prices for plans offered through California’s health insurance marketplace, also known as the Affordable Care Act marketplace, will rise by an average of 9.9% in 2027. This comes on the heels of a 10.1% increase that began on January 1, 2026. These consecutive hikes represent the largest increases in nearly a decade and could align with rising costs across other health insurance options.

About 8 percentage points of the upcoming 10% increase can be attributed to higher healthcare costs, while 2 percentage points stem from adjustments in federal policy, according to Covered California officials.

Experts, state officials, and insurers all indicate that hospital, doctor, and prescription drug prices are climbing. Additionally, the end of a $2.5 billion annual federal subsidy for California policyholders is intensifying pressure on the marketplace, as healthy individuals are dropping their coverage, leaving insurers with a smaller pool of costlier, sicker clients.

The actual increase for buyers in 2027 will vary based on their specific plan and income. Fortunately, low-income and some moderate-income Californians may still qualify for government subsidies to help lessen their costs.

Although the base rate went up by roughly 10% in 2026, customers experienced nearly a doubling of their monthly payments once federal support was reduced. Covered California intends to notify buyers of the new pricing and options via a letter in October, ahead of the general enrollment period starting in November.

Approximately 1.8 million Californians secure health insurance through Covered California. This group includes those who earn too much for Medi-Cal, those not yet eligible for Medicare, and individuals without affordable employer-provided coverage, like gig workers or the self-employed.

Jessica Altman, the executive director of Covered California, noted that around 10% of these customers will face the full price hike since they earn over 400% of the federal poverty level and don’t qualify for subsidies. For individual filers, this threshold is roughly $65,000 annually.

“These individuals are experiencing immense financial strain,” Altman remarked. “They are the only group in our healthcare system required to pay their premiums in full without any support.”

Kaiser Permanente’s California plans are expected to see a 6.7% increase in 2027, less than the statewide average. In 2026, the nonprofit health firm raised its plans by 7.1%. Spokesperson Elissa Harrington mentioned that staffing and prescription drug costs are continuing to rise due to increased demand for care.

“We must adjust our rates to accommodate these rising costs, but our increases are generally lower than those of other health plans,” she added via email.

Anthem Blue Cross, a general insurance company based in Northern California, plans to increase premiums by an average of 13% in 2027, following a 14.5% jump in 2026. A spokesperson for the company declined to provide further comment.

Anthem Blue Cross is a subsidiary of Elevance Health, a publicly traded company located in Indiana.

Cynthia Cox, a senior vice president at KFF, an independent analysis group, explained that U.S. healthcare spending is rising at an unprecedented rate, leading health plans to pass these costs onto consumers.

She noted that healthcare spending typically outpaces general inflation. Nonetheless, Cox highlighted that recent industry estimates suggest U.S. healthcare costs could increase by 9% in 2027, marking the fastest rise in 17 years. Consequently, employer-sponsored plans may cost more than usual next year.

The California Association of Health Plans indicated that hospital spending primarily drives elevated premiums, in addition to soaring prescription drug prices, including popular GLP-1 medications used for weight loss and diabetes treatment.

“California Health Insurance remains committed to making premiums as affordable as possible for individuals and families,” asserted President Charles Bacchi in a statement.

The California Hospital Association refuted the insurance companies’ claims regarding rising hospital spending. “Insurance complaints about increasing hospital costs are simply untrue,” stated spokesperson David Simon. “More funds are being allocated to provide the necessary hospital care as California’s population ages and health issues become more prevalent.”

In 2025, then-President Donald Trump and Congressional Republicans chose not to enhance assistance for insurance buyers in Covered California. Insurers believe this decision forced them to raise premiums further, as healthier individuals often drop their policies when costs rise, leaving companies with a higher ratio of sicker clients.

This shift also significantly increased what customers had to pay. Market data indicated that Californians lost about $2.5 billion in subsidies this year, with average monthly premiums surging by around 97%, according to Altman.

Covered California anticipates that up to 400,000 Californians could lose their coverage due to federal policy changes. Although the decline to date is slight, it’s still notable.

Altman reported that registered users fell by roughly 170,000, or nearly 9%, dropping from 1.94 million in April 2025 to 1.77 million in April 2026.

Experts suggest that Covered California plans serve as a last resort for individuals unable to find insurance elsewhere, making it likely that many who fall outside the market rates will end up uninsured.

California has managed to reduce its fiscal burden compared to some other states. A Peterson-KFF analysis revealed that rates for Affordable Care Act marketplace plans across 16 states and Washington, D.C., are expected to rise by an average of 14% next year.

To help prevent more buyers from being priced out, Governor Gavin Newsom and state lawmakers have expanded state subsidy funding this year, allocating $300 million, up from last year’s $190 million, to assist low-income insurance buyers.

Individuals earning up to $32,000 per year may qualify for assistance through state programs, and Covered California estimates this funding could help prevent 90,000 people from losing insurance coverage in the upcoming year.

However, that aid won’t be available once the subsidy cap is exceeded, compelling Californians to weigh their options: absorb the entire increase in 2027 or decide if they can still afford coverage.