Californians enrolled in the Affordable Care Act (ACA) marketplace may soon face significant cost increases for their health insurance. This week, the state plans to notify enrollees that their premiums could rise sharply next year unless Congress extends COVID-era tax credits, which were authorized in 2021 to supplement ACA subsidies. These credits have been popular, with more than three-quarters of adults, including 59% of Republicans, supporting their extension, according to a KFF poll.
The enhanced tax credits have played a crucial role in lowering premiums and reducing the nation’s uninsured rate. However, if these credits expire, the cost for subsidized consumers is expected to more than double on average. This would affect over 24 million marketplace enrollees nationwide, including nearly 2 million in Covered California, the state’s largest health insurance marketplace. California Healthline reports that the loss of these credits could lead millions to drop their coverage, including hundreds of thousands in California.
The federal government shutdown, stemming from disagreements between Democrats and Republicans over extending the tax credits, adds to the uncertainty. Democrats want to include the extension in a bill to end the shutdown, while Republicans are concerned about the cost, estimated at $350 billion over 10 years. LAist notes that Senate Majority Leader John Thune has left the door open to extending the credits but suggests potential reforms.
Without the enhanced subsidies, Covered California projects that enrollees could see their premium costs rise by an average of 97%. Some individuals, particularly those in rural areas or with incomes over $62,600, may face even steeper increases. KFF’s research indicates that many marketplace enrollees are unaware of the potential hikes, which could lead to more people being uninsured or underinsured.
Open enrollment for 2026 ACA health plans begins on November 1, leaving enrollees uncertain about their future costs. Covered California has prepared two versions of their open enrollment letters, one with tax credit extensions and one without, hoping for congressional action before sending the latter.
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