California's health exchange faces turmoil as shutdown drags on

The Rising Cost of Health Insurance in California

California is preparing to inform Affordable Care Act (ACA) marketplace enrollees that their health insurance costs could increase significantly next year if Congress does not extend the current subsidies. These subsidies have been instrumental in making health insurance more affordable for millions of Americans, especially those with low and moderate incomes.

Health care analysts warn that the number of uninsured individuals in the United States could rise sharply if federal lawmakers fail to renew the tax credits introduced during the pandemic. These credits were designed to supplement the existing ACA subsidies, helping people afford health insurance. According to a recent poll by KFF, a nonprofit health information organization, over three-quarters of adults support extending these enhanced tax credits, including 59% of Republicans.

The additional credits have played a crucial role in lowering premiums and reducing the national uninsured rate. However, without an extension, the cost of coverage for many will more than double, leading to significant financial strain on millions of Americans.

Political Tensions Over Subsidies

Despite some bipartisan support for extending the tax credits, there remains a deep divide between Democrats and Republicans. Republican leaders are pushing for a government shutdown deal first, while Democrats are advocating for a bill that would end the shutdown and include the continuation of the subsidies.

President Donald Trump recently hinted at a potential health care deal, and even some prominent Republicans, like U.S. Rep. Marjorie Taylor Greene, have expressed support for extending the credits. Greene criticized the potential doubling of premiums if the credits expire, calling it unacceptable.

However, the political stalemate continues. Democrats argue that extending the subsidies is essential for maintaining coverage for millions, while Republicans oppose the cost and, in some cases, the ACA itself. The estimated cost of extending the credits is $350 billion over 10 years, a figure that has become a point of contention.

Impact on California Enrollees

California’s Covered California, the state’s largest health insurance marketplace, is particularly affected. If the subsidies are not extended, the average premium costs for enrollees could rise by 97%. Some individuals may see their out-of-pocket costs triple, especially those in rural areas or with higher incomes.

Rural residents, especially in northern and eastern counties and along the Monterey Coast, are expected to face disproportionately large increases. Those earning over $62,600 may lose all financial aid, leaving some individuals aged 55-64 with premium bills as high as 30% of their income.

Health care professionals warn that the loss of subsidies could lead to increased medical debt and more people becoming uninsured or underinsured. This, in turn, could place additional strain on emergency rooms and community clinics already struggling with high demand.

State Funding and Future Uncertainty

California has allocated about $190 million for 2026 to help offset the loss of the enhanced premium subsidies. However, this amount is used primarily to reduce deductibles and coinsurance payments, which is a small fraction compared to the $2.5 billion in annual financial aid currently provided through the expiring tax credits.

Advocacy groups like Health Access California warn that many people will be forced to make difficult choices between groceries, rent, and health insurance. Rachel Linn Gish, a spokesperson for the group, says, “A lot of people are going to be shocked at what they’re facing.”

Covered California has delayed sending out formal open enrollment letters, hoping for clarity from Washington. The agency has prepared two versions of the letter—one assuming the continuation of the credits and another showing the impact of their expiration. However, without congressional action, the worst-case scenario may become a reality.

A Pivotal Moment for Health Care

As the open enrollment season for 2026 approaches, the uncertainty surrounding the future of the subsidies has created a sense of urgency. Jessica Altman, executive director of Covered California, emphasizes that this is a pivotal moment for the state’s health care system.

“We are at a pivotal moment,” she says. “People need to be able to shop for health plans.” But without clarity, many enrollees may face unexpected and potentially unaffordable increases in their health insurance costs.