California this week plans to notify Affordable Care Act marketplace enrollees that their costs could rise sharply next year unless Congress extends subsidies to help people buy health insurance.
Health care analysts say the nation's uninsured population will rise significantly if federal lawmakers do not agree to renew covid-era tax credits, which Congress authorized in 2021 to supplement ACA subsidies.
They’re popular too. According to a KFF poll, more than three-quarters of adults, including 59% of Republicans, say they want Congress to extend the enhanced tax credits for people with low and moderate incomes. KFF is a health information nonprofit that includes KFF Health News, the publisher of California Healthline.
The additional credits have lowered premiums, helped millions of Americans afford the cost of ACA insurance, and lowered the nation's uninsured rate.
Last week, President Donald Trump suggested a health care deal might be in the works. And Republican U.S. Rep. Marjorie Taylor Greene of Georgia, long aligned with the "Make America Great Again" movement, appeared to endorse an extension of the tax credits, saying in a social media post that she was "absolutely disgusted that health insurance premiums will DOUBLE if the tax credits expire this year."
However, Republican leaders want to reopen the government first, while Democrats want a deal in a bill that ends the shutdown.
If the supplemental subsidies are not extended beyond this year, the amount subsidized consumers pay for their ACA health plans is expected to more than double on average. That would be a painful cost-of-living increase for most of the country's more than 24 million marketplace enrollees, including almost 90% of the nearly 2 million people in Covered California, the largest state-run health insurance marketplace. Analysts say the loss of enhanced credits would lead millions to drop their coverage nationally, including hundreds of thousands in California.
The federal government shutdown stems primarily from a disagreement between Democratic lawmakers, who want to extend the tax credits, and Republicans opposed to the cost and, in many cases, to the landmark health care law itself. One estimate puts the price tag at $350 billion over 10 years. The Democrats hope their stance can help them win back the House in next year's midterm elections, as they did in 2018 following a failed GOP effort to repeal the ACA.
Open enrollment season for 2026 ACA health plans starts Nov. 1 in most states, including California, and enrollees still have no clue whether their premiums will rise exorbitantly next year.
"People need to be able to shop for health plans," says Jessica Altman, executive director of Covered California. "We are at a pivotal moment."
In July, Covered California sent notices to enrollees breaking out the enhanced portion of their federal subsidy that is set to expire. The idea was to give them a warning of how much their costs might rise if they chose to keep the same health plan next year.
In one case, a common scenario for middle-income enrollees, the entire subsidy of $200 a month would go away. Another enrollee stood to lose one-third of a total $600 per month in aid, according to sample notices provided by Covered California.
The additional tax credits have provided financial assistance to many middle-income health plan shoppers who didn't qualify for the original subsidies and increased the amount of aid for many others.
Senate Majority Leader John Thune in late September left the door open to extending the otherwise-expiring tax credits but said "it would have to come with some reforms."
Those might include changes that would reduce the number of enrollees eligible for the extra financial aid, based on income, and reduce or eliminate zero-premium plans, which have become widely available with the advent of the additional tax credits.
If the enhanced subsidies end, Covered California projects its enrollees receiving enhanced subsidies will see their premium costs rise an average of 97%. But the increases will not be borne equally. Depending on age, income, and location, some people will see smaller jumps while others could see their out-of-pocket costs triple, Altman says.
Rural residents, especially in the northern and eastern counties, and along the Monterey Coast, will see disproportionately large cost increases, according to projections from Covered California. Enrollees with incomes over $62,600 will lose financial aid altogether, leaving some who are ages 55-64 with premium bills as high as 30% of their income.
Without the enhanced subsidies, "we're going to see more people experiencing medical debt, more people being either uninsured or underinsured," says Cary Sanders, senior policy director at the nonprofit California Pan-Ethnic Health Network. "And that is the quickest way for families to lose their economic security."
Covered California estimates about 400,000 people would leave the exchange and likely go without insurance. And that, health care professionals and advocates warn, will only heap stress — in the form of more crowded emergency rooms and community clinics — on an already stressed health care system.
But the proportional impact in California will be smaller than in some Republican-led states such as Florida, Texas, and Georgia. Since those states did not embrace the ACA's Medicaid expansion, millions of residents thronged to Obamacare marketplace plans, particularly after the enhanced tax credits made coverage eminently more affordable.
From 2020 to 2025, ACA marketplace enrollment grew nearly 2.5 times in Florida to 4.7 million — more than double California's marketplace enrollment. In Texas, it more than tripled to just under 4 million. Georgia's tripled, too, to 1.5 million.
California has about $190 million for 2026 in state funds to help offset the loss of the enhanced premium subsidies. But that money is currently used to help offset enrollee deductibles, coinsurance payments, and other out-of-pocket expenses. And it's a drop in the bucket compared with the $2.5 billion annually in financial aid Covered California enrollees currently receive from the expiring tax credits.
"A lot of people are going to be shocked at what they're facing," says Rachel Linn Gish, a spokesperson for the nonprofit advocacy group Health Access California. "They're going to have to make super hard choices of, 'Do I cut back on my groceries, or my rent, or do I go uninsured?'"
Very soon, Covered California and other ACA marketplaces will have to send out formal open enrollment letters, notifying enrollees precisely what to expect for 2026 coverage.
Covered California typically sends those letters out Oct. 1 but has delayed them to around Oct. 15 in the hope that Washington will provide clarity. For now, Covered California has two versions of the letter on ice, one with tax credit extensions and one without.
Altman says she is hoping for congressional action before sending the one with whopping premium increases. But she may have no choice.
"That's the default here, as in the thing that will happen if nothing changes," Altman says. "It is also the worst-case scenario, unfortunately."
She fears that if Covered California informs enrollees that their rates will likely rise sharply, it will scare many away, even if Congress later agrees to extend the credits.
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