Covered California, the state’s health insurance marketplace, has achieved a remarkable milestone with 1.8 million enrollees, and this number may continue to grow as the January 31 open enrollment deadline approaches. This surge in enrollment can largely be attributed to enhanced subsidies that have made health insurance plans more affordable for many Californians.
However, the momentum towards expanding health coverage for all residents could face significant challenges with the anticipated second Trump administration and a Republican Congress that has historically opposed the Affordable Care Act (ACA), also known as Obamacare.
A primary concern for Covered California officials is the impending expiration of additional federal subsidies for health insurance, which were enacted by Congress in 2021 as part of a COVID-19 relief package. These subsidies have played a crucial role in lowering premiums nationwide, particularly benefiting middle-class families purchasing insurance through the ACA exchanges.
Jessica Altman, Executive Director of Covered California, emphasized the importance of monitoring the situation regarding the potential renewal of these enhanced subsidies. Prior to the introduction of these subsidies, the program had approximately 1.5 million enrollees.
Republicans have frequently criticized the cost of these subsidies, and it remains uncertain whether they will be renewed. If they are not extended, researchers from the University of California-Berkeley Labor Center estimate that premiums for subsidized enrollees in Covered California could increase by an average of $967 per year starting in 2026, potentially resulting in 69,000 Californians losing their health insurance coverage.
In response to rising costs, California took proactive measures last year to make health coverage more affordable by eliminating deductibles and reducing out-of-pocket costs associated with mid-tier “silver” plans. However, the state’s healthcare funding could come under additional strain if Republicans in Washington move forward with plans to cut funding for Medicaid, known in California as Medi-Cal. Alongside efforts to strengthen Covered California, the state has also expanded Medi-Cal to include undocumented immigrants, with annual spending on the program reaching $161 billion, half of which is funded by the federal government.
As of December 14, approximately 144,000 of Covered California’s enrollees are first-time buyers, with nearly 90% qualifying for financial assistance. Due to natural disasters, such as wildfires, the enrollment period has been extended to March 8 for residents in Los Angeles and Ventura counties.
Low-income residents often pay little or nothing for their monthly premiums, while those with higher incomes face premiums capped at a percentage of their household income. Thanks to enhanced federal subsidies, no individual is required to spend more than 8.5% of their income on premiums if they choose a silver plan. Although these plans can have smaller provider networks and higher out-of-pocket costs, the average monthly premium for those receiving subsidies is approximately $136, with two-thirds of enrollees paying $10 or less monthly. However, higher-income families, such as a family of four earning $200,000 in the Los Angeles area, could pay over $1,000 a month for a silver plan.
While federal and state subsidies have greatly increased the support available for enrollees, the overall cost of insurance continues to rise. Covered California premiums are projected to increase by an average of 7.9% for 2025, but the additional subsidies will shield most enrollees from feeling the impact of this rise.
Dylan Roby, a professor of health, society, and behavior at the University of California-Irvine, noted that although out-of-pocket spending may be lower for many, this does not necessarily indicate that premiums are decreasing. Instead, it suggests that the government is covering a larger share of premiums on behalf of enrollees than in the past.
Neither Trump nor incoming congressional leaders have provided clear insights into their stance on the future of the subsidies, although both have a history of attempting to repeal or undermine the Affordable Care Act. House Speaker Mike Johnson has promised "massive reform" of the health care law, though specifics remain vague.
Experts like Roby suggest that Republicans may choose to extend the subsidies to prevent backlash from consumers, health insurers, and hospitals that have benefited from them. Enrollment in marketplace plans is particularly high in Republican-controlled states that have not expanded Medicaid, as these plans offer low-income individuals a pathway to affordable health insurance.
Roby expressed cautious optimism that the subsidies would be renewed, noting that Republican House members may not be eager to increase their constituents’ health insurance costs. However, the uncertainty surrounding the subsidies, even if they are ultimately renewed, could impact the pricing of marketplace plans. Insurers are already beginning to plan their rates for the upcoming year, likely factoring in the risk of non-renewal.
Rachel Linn Gish, communications director for Health Access California, a consumer advocacy coalition, emphasized the ongoing battle to preserve these enhanced subsidies and the overall framework of the Affordable Care Act. She warned that any rollback could lead to significant losses in health coverage for many individuals.
In summary, while Covered California has reached a significant enrollment milestone, the future of health insurance subsidies remains uncertain. The potential expiration of enhanced subsidies poses a threat to the affordability of health coverage for many Californians. As the political landscape shifts, stakeholders will need to advocate vigorously to protect the gains made in health coverage access and affordability.