Premiums Are Soaring for Millions of Californians.

Nearly 2 million Californians get their health insurance through Covered California, and about 1.7 million of them depended on enhanced federal premium tax credits that made monthly coverage affordable.¹ Those credits expired on December 31, 2025 — an outcome HR1 cemented by declining to extend them, even as the same law layered on new restrictions that make marketplace coverage harder to get and costlier to keep.²

The result is the largest premium increase in Covered California’s history: losing the enhanced credits was projected to raise the average enrollee’s premium 97% — nearly a doubling of what families pay out of pocket.³ Altogether, Washington’s choices are stripping $2.5 billion a year in savings from California households,⁴ and the damage is already visible: new signups fell 32% this year.⁵ And the premium story does not end at the marketplace: HR1’s deep cuts to Medi-Cal threaten coverage for as many as 3.4 million Californians and are projected to roughly double the state’s uninsured population — driving up costs for everyone with private or job-based insurance, too.⁶

AT A GLANCE

Figures reflect Covered California, CalHHS, KFF, CalMatters, CAHP, and Marsh/Mercer analyses of 2026–2030 impacts.

A PREMIUM SHOCK BUILT IN WASHINGTON

The enhanced premium tax credits, first enacted in 2021, capped what marketplace enrollees paid as a share of their income and extended help to middle-class families for the first time. Congress allowed them to lapse at the end of 2025, and HR1 pointedly did not renew them.⁷ Covered California called the combined impact of the 2026 rate increase and the lost credits “devastating.”⁸

WHAT IT MEANS AT THE KITCHEN TABLE

For real families, the subsidy cliff translates into steep monthly increases:⁹

• Households earning under $23,500: monthly premiums jump from about $40 to $85.

• $23,500–$31,000: from $47 to $124 — an extra $77 a month.

• $31,000–$39,000: from $89 to $200 — an extra $111 a month.

• Adults age 55–64: from $186 to $365 a month.

• Middle-income enrollees above ~$63,000 lose their credits entirely — some seeing increases of $485 or more per month.

The pain is not evenly shared. Covered California projects premium increases of 122% for Latino enrollees and 106% for Black enrollees, and roughly 500,000 self-employed Californians face an average increase of $131 a month.¹⁰

HR1 PILES ON: NEW BARRIERS AND HIDDEN COSTS

The expiring credits are only part of the story. HR1 itself rewired the marketplace to shrink enrollment and raise costs:¹¹

• Immigrants lose help. HR1 eliminates premium tax credits for many lawfully present immigrants, and more than 40 immigrant categories lose eligibility beginning in 2027 — pricing hundreds of thousands out of coverage.

• A tax-time trap. HR1 removes the cap on repaying advance tax credits, so a family whose income comes in higher than projected can be forced to pay back the full subsidy at tax time.

• Fewer paths to coverage. HR1 ends subsidized enrollment through income-based special enrollment periods and adds paperwork and verification hurdles, ending automatic re-enrollment.

• Higher deductibles. As families flee to cheaper plans, out-of-pocket costs climb: nationally the average marketplace deductible rose 37% for 2026 — from $2,759 to $3,786, the steepest jump on record.¹²

The combined effect: CalHHS projects up to 660,000 Covered California enrollees could become uninsured, with about 400,000 losing coverage in 2026 from the subsidy expiration alone.¹³

CALIFORNIANS ARE ALREADY WALKING AWAY

This is not a forecast — it is already happening. When Covered California closed its 2026 open enrollment, new signups were down 32%, with Latino enrollment down 39%, Black enrollment down 34%, and sign-ups among people just above the subsidy line down 59%.¹⁴ Among middle-income consumers who lost all federal help, the cancellation rate doubled to 22%. More than 130,000 existing enrollees dropped to Bronze plans — trading lower premiums for far higher deductibles. As Covered California’s director put it, people “had to make sacrifices and shift to lower-tier plans” just to hold on to coverage.¹⁵

MEDI-CAL CUTS BECOME EVERYONE’S PREMIUM INCREASE

The deepest damage runs through Medi-Cal — and it does not stay there. HR1 is projected to roughly double California’s uninsured population — a net increase of about 2.2 million people by 2030 — and, at the high end, could strip Medi-Cal coverage from as many as 3.4 million Californians. It is a historic unraveling of coverage — and it lands on everyone’s premiums.¹⁶

As coverage disappears, hospitals absorb the unpaid bills: statewide uncompensated care is projected to double, from about $2 billion to $4 billion a year. Research suggests hospitals absorb most of that cost rather than billing it straight through — roughly 80%, by one estimate — and economists disagree about how much of the remainder reaches commercial premiums. But in the many California markets with little hospital competition, hospitals have more room to press insurers for higher rates. Splitting the difference between those views, Emory health policy professor Kenneth Thorpe puts the effect of the federal cuts alone at roughly 1–2% — about $500 a year for the average family.¹⁷

There is a second channel. To claw back a fraction of the lost federal money, California is restructuring its health-plan (“MCO”) tax to fall more heavily on commercial coverage — adding an estimated $100 or more per person per year, with health plans projecting increases of $400 or more for a working family.¹⁸ Either way the result is the same: Californians who never set foot in Medi-Cal will pay more because of the cuts to it.

Employers are already budgeting for it. A national survey of more than 1,800 employers, released September 2, 2026, projects that health benefit costs per worker will rise 8.2% in 2027 — the steepest increase since 2003 — and would rise about 11% if employers made no cuts to absorb it. More than a third of those employers expect increases of at least 10% even after cutting benefits, and the survey’s authors point to hospital consolidation and to public coverage that is not keeping pace with costs, which pushes uncompensated care and underpayment onto private plans. California, with the nation’s largest Medicaid program and among its largest projected coverage losses, sits at the front of that pressure.¹⁹

PROVIDER PAYMENT CUTS DEEPEN THE SQUEEZE

HR1 also dismantles the financing tools California used to pay its providers. The MCO tax that currently raises $7–8 billion a year could collapse to “tens of millions” when it must be renewed under HR1’s rules in 2027, and the law caps Medi-Cal “directed payments” at Medicare rates rather than commercial rates — cutting hospital payments by billions.²⁰ Medi-Cal already reimburses providers only about 75–80 cents on the dollar; as HR1 widens that gap, hospitals and clinics lean harder on privately insured patients to make up the difference — the classic cost-shift. There is little cushion left to absorb it: the California Hospital Association reports that more than half of California’s hospitals are already operating at a loss.²¹

MEDI-CAL PATIENTS PAY MORE, TOO

The new costs reach Medi-Cal enrollees directly. HR1 opens the door to cost-sharing of up to $35 per service for many Medi-Cal expansion adults — the first time this population faces out-of-pocket charges at the point of care.²² And the millions who lose Medi-Cal altogether are pushed toward a marketplace where, as this brief describes, premiums are spiking at the same moment — leaving many with no affordable option at all.

CALIFORNIA’S RESPONSE — AND ITS LIMITS

California partially cushioned the marketplace blow with state subsidies, enrolling 389,590 residents in state-supported plans at an average of $45 a month, funded by $190 million from the Health Care Affordability Reserve.²³ But that help reaches only the lowest-income enrollees — up to 165% of the federal poverty line — and comes nowhere near replacing the $2.5 billion in vanished federal support, let alone the far larger Medi-Cal cuts. For the great majority of California families, the increases are landing in full.

BOTTOM LINE

HR1 raises health costs for Californians twice over. For the large majority of Covered California’s nearly two million enrollees, it means paying dramatically more for the same coverage — or dropping it. And through deep cuts to Medi-Cal, it quietly pushes billions in costs onto everyone else: higher commercial and employer premiums, a bigger health-plan tax, longer ER waits, and fewer services. The people hit first and hardest are working families, older adults, self-employed Californians, and communities of color — but through the hidden cost shift, even Californians with solid job-based insurance end up paying for the coverage HR1 takes away.

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1. Covered California, “Rates and Plans for 2026: Consumer Affordability on the Line With Uncertainty Surrounding Federal Premium Tax Credit Extension,” Aug. 14, 2025. https://www.coveredca.com/newsroom/news-releases/2025/08/14/↩︎

2. National Health Law Program, “2026 Changes to Covered California: Federal Action Is Taking Swings at California’s Marketplace,” 2026. https://healthlaw.org/2026-changes-to-covered-california-federal-action-is-taking-swings-at-californias-marketplace/↩︎

3. Office of Governor Gavin Newsom, “Fact Sheet: Enhanced Premium Tax Credit Expiration Impacts,” Sept. 2025. https://www.gov.ca.gov/wp-content/uploads/2025/09/Fact-Sheet-EPTC-Expiration-Impacts.pdf↩︎

4. Covered California, “Impacts of the Enhanced Premium Tax Credits in California” (congressional fact sheet), Sept. 2025. https://www.coveredca.com/pdfs/congressional-fact-sheet922025.pdf↩︎

5. Covered California, “As Enhanced Federal Subsidies Expire, Covered California Ends Open Enrollment With State Subsidies Keeping Renewals Steady — for Now — and New Signups Down,” Feb. 26, 2026. https://www.coveredca.com/newsroom/news-releases/2026/02/26/↩︎

6. Medi-Cal coverage loss: California Health & Human Services Agency, “H.R. 1 Impact,” July 19, 2025; https://www.chhs.ca.gov/wp-content/uploads/2025/07/CalHHS-Merged-HR1-Slides-7.19.25.pdf. Projected rise in the uninsured by 2030: CalMatters, “Medicaid cuts stand to hit everyone,” Aug. 7, 2026; https://calmatters.org/health/2026/08/the-cut-medi-cal-ripple-effects/↩︎

7. National Health Law Program, supra note 2.↩︎

8. Western Center on Law & Poverty, “Covered California announces devastating premium increases for 2026,” 2025. https://wclp.org/increased-covered-california-premiums/↩︎

9. Office of Governor Gavin Newsom, supra note 3.↩︎

10. Covered California congressional fact sheet, supra note 4.↩︎

11. National Health Law Program, supra note 2.↩︎

12. KFF, “The Average Marketplace Deductible Grew by About $1,000 Per Person in 2026, With More Enrollees Shifting to Higher-Deductible Plans as Enhanced Tax Credits Expired,” May 19, 2026. Figure is national. https://www.kff.org/affordable-care-act/the-average-marketplace-deductible-grew-by-about-1000-per-person-in-2026-with-more-enrollees-shifting-to-higher-deductible-plans-as-enhanced-tax-credits-expired/↩︎

13. California Health & Human Services Agency, supra note 6.↩︎

14. Covered California, supra note 5.↩︎

15. Covered California, supra note 5.↩︎

16. California Health & Human Services Agency and CalMatters, supra note 6.↩︎

17. CalMatters, supra note 6.↩︎

18. California Association of Health Plans estimate, reported in Live Insurance News, “The Hidden Health Insurance Cost Increase Coming for California Families,” 2026. https://www.liveinsurancenews.com/health-ins-increase-california/8573342/↩︎

19. New York Times, “Employer Health Costs Are Expected to Spike in 2027,” Sept. 2, 2026, reporting preliminary findings from the Mercer (Marsh) National Survey of Employer-Sponsored Health Plans. https://www.nytimes.com/2026/09/02/business/health-insurance-increases.html↩︎

20. Legislative Analyst’s Office, “H.R. 1 Financing Impact on Medi-Cal Providers,” handout, Apr. 6, 2026. https://lao.ca.gov/handouts/health/2026/HR1-Financing-Impact-on-Medi-Cal-Providers-040626.pdf↩︎

21. CalMatters, supra note 6 (quoting California Hospital Association president and CEO Carmela Coyle).↩︎

22. California Health & Human Services Agency, supra note 6.↩︎

23. Covered California, supra note 5.↩︎