Health Insurance Premiums in California Set to Skyrocket
Californians renewing their public health plans or enrolling for the first time might be in for a surprise when open registration opens this Saturday. Monthly premiums for plans on the Covered California Exchange, often referred to as Obamacare, are predicted to increase by an average of 97% in 2026.
This sharp rise in premiums is linked to the ongoing federal government shutdown that began on October 1st, which stems from a budget deadlock between Republicans and Democrats. The key issues at stake are whether to extend health insurance eligibility for millions more Americans and whether to continue the Biden-era tax credits that help make insurance affordable for current policyholders. Interestingly, around 1.7 million of the 1.9 million Californians who are enrolled in Covered California depend on these tax credits.
The upcoming open registration period lasts from November 1st to January 31st, traditionally a time when members review their options, make necessary changes, or new members join in.
However, this year’s uncertainty surrounding subsidies due to the shutdown leaves many questions unanswered. The subsidies, first introduced during the pandemic to lower insurance costs, will lapse at the end of the year unless lawmakers act promptly.
Californians browsing the exchange could be faced with tough decisions ahead. Jessica Altman, executive director of Covered California, remarked on the complexities involved. Losing the tax credits for premiums would only add to the frustrations many experience during this already confusing process.
Even with subsidies intact, premiums for Covered California plans are still projected to soar by about 10% in 2026, driven by rising drug prices and medical service costs, according to Altman.
If those subsidies disappear, Covered California estimates that members relying on financial aid could see their monthly premiums jump by about $125 in 2026. The organization warns that such escalating costs may leave many Californians without any insurance.
“Californians will be hit hard, facing rising premiums alongside the potential end of tax credits,” Altman explained. “We anticipate that nearly 400,000 members may drop their coverage entirely, which is truly concerning.” This rise in premiums risks alienating exactly the groups the Affordable Care Act was designed to support, including individuals who earn too much for Medicaid but too little to afford private insurance.
This affects a wide array of Californians—bartenders, hairdressers, small business owners and even gig workers—anyone juggling multiple jobs just to get by. The policy changes would also hit those with ongoing medical conditions that require extensive treatment.
The enhanced subsidies, which expanded eligibility criteria for tax credits during the Biden administration, brought about 160,000 more middle-income Californians into the program, generating an estimated savings of about $2.5 billion per year in premiums for enrollees, Covered California reported.
In response to rising costs, California lawmakers recently allocated additional funds aimed at relieving some of the premium increases through state-level tax credits. The new budget will provide payments to individuals earning up to 150% of the federal poverty level, helping keep monthly premiums at 2025 levels for lower-income individuals.
Altman suggested that while these state tax credits could offer some relief, it might not suffice. Reports indicate a significant decrease in enrollment, especially within Covered California, which currently has about 400,000 registered members.
The national landscape looks even bleaker. The Congressional Budget Office warned that if enhanced subsidies are allowed to expire, the number of uninsured Americans could increase by 2.2 million in 2026 and reach an average of 3.8 million annually from 2026 to 2034.
LA Care, which serves 230,000 low-income Californians, faces a similar dilemma. CEO Martha Santana Chin noted that a vast majority of their clients rely on subsidies to help cover health insurance costs, and unless significant changes occur, a lot of individuals might lose coverage.
Furthermore, as more people opt to go uninsured, a strain on emergency rooms for non-emergency care could emerge, which would disrupt the healthcare system’s balance. This, in turn, could lead to higher rates charged to private insurance companies, ultimately elevating costs for those who do have coverage.
With subsidy expiration looming and Medicaid eligibility tightening, concerns are mounting for those left with few options. There’s particular worry about communities of color who are significantly represented among low-income Californians. If out-of-pocket costs rise, it could severely impact households already struggling to make ends meet.
“When you’re living paycheck to paycheck, where do you find the extra $100, $150, or $200?” Altman asked, highlighting a troubling reality for many.
