Heather Altman at her Long Beach home, expressing concerns about affording health insurance following a new GOP budget bill. Photo by Jules Hotz of Calmatters
Heather Altman left her corporate job to start her environmental consulting business back in 2014, when the Affordable Care Act allowed greater access to independent health insurance. Initially, she paid $356 monthly for a Platinum Plan.
Now, her bills have soared to $1,147 for the Gold Plan, marking a staggering 222% rise over ten years. It’s not even that great of a plan. Medical costs have been consistently outpacing general inflation, and recent changes, like a budget signed by Donald Trump, leave Altman worried about her ability to maintain coverage.
“Trying to figure out how to navigate this since the Senate passed this bill is exhausting,” she commented.
Altman is among the approximately 2 million Californians who depend on the ACA market, often referred to as Obamacare or Covered California. Many enrollees work for small businesses or are self-employed, like her, and don’t have employer-provided insurance.
The majority of those enrolled are middle-income individuals, earning under $60,240 a year. Interestingly, about 800,000 in California earn even less.
Trump’s budget comes with some major shifts for Californians. It introduces new complexities in registration, disrupts automatic re-enrollment, and denies certain groups, such as legal refugees, financial assistance. It also requires that individuals who misestimate their income repay prior subsidies.
One of the most serious impacts of this budget bill is the expiration of enhanced subsidies, initially introduced during the pandemic to make insurance more affordable. These subsidies have halved premiums and doubled enrollment from 12 million to 24 million across the U.S. within a few years.
Close to 90% of enrollees in California rely on these federal grants.
Changes will begin affecting consumers next year, with rising prices becoming apparent as open enrollment starts in November. Other significant shifts will take place by 2028, complicating the registration process even further.
Projected Cost Increases
On average, premiums could rise by 66%, which is about $101, without subsidies. For lower-income individuals, the increases might feel even more severe. Data suggests that those earning under 400% of the federal poverty level will have to pay about $191 monthly on average.
Individuals with incomes above $170,000 will lose existing financial aid. While some aid will still be available, it won’t be as extensive, limiting eligibility.
Congress might decide to extend the enhanced subsidies before year-end, but currently, there’s no action in sight. The Congressional Budget Office expects about 4 million people could forfeit their coverage if the subsidies lapse.
Concerns for People like Altman
Altman remarked that the yearly increase in premiums is becoming “almost unsustainable.” Although she often earns too much to qualify for assistance, the ongoing healthcare costs weigh heavily on her finances.
Over the past decade, her premiums have increased more than 11% annually, while the consumer price index rose only 2.7% during the same period.
“Honestly, if I’d known how challenging this would be when starting my own business, I might have reconsidered,” Altman reflected. About 25% of insured Californians are self-employed, and she is even contemplating asking colleagues to take her on without pay.
This kind of thinking is becoming common, noted Janae Trevillion, an HR consultant for small businesses. Many of her clients, much like Altman, are seeking corporate positions simply for benefits.
“There’s quite a bit of movement in the market right now,” Trevillion pointed out.
Potential Coverage Drop
The impending changes may lead many Californians to forgo insurance altogether, Trevillion warned. Complicated registration processes could discourage new sign-ups.
“People just get frustrated,” she added. “They may end up saying, ‘Forget it,’ and that could deter them from participating in health coverage.” California anticipates that around 600,000 residents might drop their insurance due to these shifting conditions.
“We’ve made significant strides to increase coverage, but any setbacks could leave fewer people insured,” said Jessica Altman, who holds a similar last name but is unrelated to Heather.
Typically, about 70% of eligible Californians are automatically re-registered annually, but this process is ending due to the new policy from Trump’s budget.
Edwin Park, a Georgetown University professor specializing in health policy, predicts that costs will rise even further as more individuals drop out. “If a large number of healthy people exit the insurance pool, it leaves behind those who are costlier to cover, leading to increased premiums,” he explained.
Recently, California has managed to maintain low-risk insurance pools by attracting younger and healthier individuals, according to Jessica Altman.
Estimates from the Congressional Budget Office suggest that if the risk pool declines, premiums for the Affordable Care Act’s Silver Plan could spike by an additional 7.9% due to the sicker population remaining.
