California Warns Affordable Care Act Enrollees of Potential Cost Increases
California is set to notify individuals enrolled in the Affordable Care Act (ACA) insurance marketplace that their costs could significantly rise next year unless Congress extends the subsidies that help people afford coverage.
Health sector analysts caution that the number of uninsured individuals in the country will rise significantly if federal lawmakers do not renew the subsidies created during the COVID-19 pandemic, which Congress approved in 2021 as a supplement to ACA subsidies.
A survey by the Kaiser Family Foundation (KFF) shows that over three-quarters of adults, including 59% of Republicans, support extending enhanced subsidies for low and moderate-income individuals.
These additional subsidies have lowered monthly premiums, assisted millions of Americans in purchasing ACA health insurance, and decreased the national uninsured rate.
In early October, President Donald Trump hinted at a potential health care agreement, while Republican Congresswoman Marjorie Taylor Greene voiced support for extending subsidies, expressing outrage over potential premium increases if the subsidies expire.
However, Republican leaders prioritize reopening the federal government first, while Democrats aim to include the agreement in the bill to end the shutdown.
If the additional subsidies are not extended beyond this year, the cost for consumers purchasing ACA plans is expected to more than double on average next year.
This would result in a significant increase in living costs for over 24 million individuals enrolled in insurance markets, including 90% of the nearly 2 million covered by Covered California, the largest state-administered health insurance market.
The shutdown of the federal government stems from a disagreement between Democratic lawmakers, who support extending subsidies, and Republicans, who oppose the cost and, in many cases, the health care law itself.
One estimate suggests that the extension would cost $350 billion over 10 years. Democrats hope their stance will help them regain the House of Representatives in next year’s midterm elections, similar to the outcome in 2018 following the failed Republican attempt to repeal ACA.
The 2026 ACA health plan enrollment period begins on November 1 in most states, including California, leaving enrollees uncertain about potential premium hikes next year.
“People need to be able to compare health plans,” said Jessica Altman, CEO of Covered California. “We are at a critical juncture.”
In July, Covered California sent notifications to consumers detailing the additional federal subsidy portion set to expire, warning them of potential cost increases if they maintain the same plan next year.
For middle-income individuals, the full $200 monthly subsidy could disappear. Another enrollee could lose a third of the $600 monthly assistance received, according to examples provided by Covered California.
The additional subsidies have provided financial aid to many middle-income plan buyers who did not qualify for original subsidies and increased assistance for many others.
Senate Majority Leader John Thune indicated in late September that he did not rule out an extension of subsidies but suggested it would need to be accompanied by reforms.
These reforms could include changes to reduce the number of individuals eligible for additional aid based on income and reduce or eliminate zero-premium plans, which became widely available with the arrival of these subsidies.
If the enhanced subsidies expire, Covered California estimates that recipients would see a 97% average premium increase. However, the increases will vary based on age, income, and location, with some experiencing minor hikes while others could see their out-of-pocket costs triple, Altman explained.
Enrollees in rural areas, particularly in northern, eastern counties, and the Monterey Coast region, will face disproportionately high cost increases, according to Covered California projections. Those with incomes exceeding $62,600 will lose all financial aid, leaving some individuals aged 55 to 64 with premiums that could account for up to 30% of their income.
Without the enhanced subsidies, “we will see more individuals burdened by medical expenses, more uninsured or underinsured individuals,” said Cary Sanders, policy director at the nonprofit California Pan-Ethnic Health Network. “That is the quickest way a family can lose their economic security.”
Covered California estimates that around 400,000 individuals would exit the insurance market, likely ending up without coverage. This, health professionals and activists warn, will only increase pressure on an already strained healthcare system in the form of overcrowded emergency rooms and community clinics.
However, California’s proportional impact will be less severe than in some Republican-led states like Florida, Texas, and Georgia. Since these states did not expand the ACA Medicaid program, millions of residents turned to Obamacare marketplace plans, especially after the enhanced subsidies made coverage much more accessible.
Between 2020 and 2025, ACA marketplace enrollment almost tripled in Florida to 4.7 million, more than double that of California. In Texas, it tripled to nearly 4 million, and in Georgia, it also tripled to 1.5 million.
California has approximately $190 million in state funds for 2026 to help offset the loss of additional subsidies. However, this money is used to lower deductibles, copays, and other out-of-pocket expenses for enrollees. It is a small amount compared to the $2.5 billion annually that Covered California enrollees currently receive from expiring subsidies.
“Many people will be surprised by what’s to come,” noted Rachel Linn Gish, spokesperson for the nonprofit Health Access California. “They will have to make very difficult decisions like, ‘Do I cut back on food expenses, rent, or go without insurance?'”
Soon, Covered California and other ACA marketplaces will need to send formal open enrollment letters, notifying enrollees exactly what to expect for 2026 coverage.
Covered California typically sends these letters on October 1 but has delayed them until around October 15 in hopes of clarity from Washington. For now, the agency has two versions ready: one with subsidy extension and one without.
Altman hopes for congressional action before sending the version with significant premium increases. However, she may have no choice.
“That’s the scenario we have, that is, what will happen if nothing changes,” Altman said. “And it’s also the worst-case scenario, unfortunately.”
She worries that if Covered California informs enrollees of a likely massive premium increase, many individuals may be deterred, even if Congress later decides to extend the subsidies.
