Sacramento, California — California officials are sounding the alarm that the nation’s largest health insurance marketplace could be thrown into chaos if federal health subsidies are not renewed in time.
At the center of the issue is the potential expiration of Obamacare premium subsidies, which currently help millions of Americans — including nearly 2 million Californians — afford coverage. Without these subsidies, monthly insurance premiums in California could double, pushing hundreds of thousands of people out of the market.
“It’s going to cause a lot of grief, a lot of anxiety,” said Martha Santana-Chin, CEO of L.A. Care, a public insurance plan in Los Angeles. “Quite frankly, there’s not a whole lot we can do if people simply can’t afford to pay.”
What’s at Stake in California
California has been one of the most aggressive states in expanding coverage since the Affordable Care Act was passed. Today, nearly 90% of people enrolled in Covered California, the state’s insurance exchange, receive some form of financial assistance.
But if the federal subsidies lapse:
Premiums could double overnight.
Up to 400,000 Californians may drop coverage.
The youngest and healthiest enrollees would likely exit first, raising costs for everyone else.
Covered California’s Executive Director, Jessica Altman, confirmed that her team is preparing for two different open enrollment scenarios:
Best case — Congress extends subsidies, and the focus remains on reaching the final 6% of Californians who remain uninsured.
Worst case — Subsidies expire, leading to massive price hikes and coverage loss.
“We’re doing everything we can to prepare people,” Altman said, “but if the tax credits disappear, we will lose a lot of people.”
California’s Contingency Plan
The state has about $190 million in reserve funds set aside to help soften the blow for low-income residents. However, this is only a fraction of the $2.5 billion needed to fully offset the loss of federal aid.
California’s insurance marketplace is already bracing for higher costs in 2024. Premiums are set to rise by an average of 10% statewide, marking the steepest increase in nearly a decade.
“Those rates themselves are based on uncertainty, not just rising health care costs,” said Mary Ellen Grant of the California Association of Health Plans.
Why the Timing Matters
Congress has until the end of the year to act. But with the September 30 government shutdown deadline approaching, the timing is critical. Democrats are pushing to tie subsidy extensions to a funding deal, while Republicans say they prefer to handle it later.
Meanwhile, everyday Californians will see the impact when open enrollment begins in November, and premiums are posted in October.
Looking Ahead
Even if subsidies are extended now, changes are coming down the road. Starting in 2027, new rules will make enrollment harder:
People will need to opt in every year instead of being auto-renrolled.
Large groups of legal immigrants will lose eligibility for subsidies.
Enrollment windows will be shorter, with more paperwork and fewer financial protections.
That means California’s insurance market could be heading into a rough few years, regardless of what Congress does this fall.
Final Thoughts
The debate over federal subsidies isn’t just politics — it directly affects millions of Californians’ wallets and health coverage. If you’re enrolled in Covered California or planning to buy insurance this year, keep an eye on federal negotiations and prepare for possible premium changes.
Disclaimer: This blog is for informational purposes only. Please do your own research or consult with a licensed insurance broker for personalized advice.
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