Covered California health insurance will cost more in 2026 as officials announced a 10.3% average premium increase, the first double-digit hike since 2018.
Covered California Director Jessica Altman said Thursday that the increase reflects multiple factors, including rising medical costs, the expiration of enhanced federal subsidies, and uncertainty in the market. Insurers had expected health care costs to rise about 8% annually, making up most of the increase. The remaining 2% is tied to the loss of federal subsidies set to end this year.
President Donald Trump’s “One Big Beautiful Bill Act” excluded funding for enhanced premium tax credits used by more than 90% of Affordable Care Act enrollees. Congress created those subsidies during the pandemic, doubling nationwide enrollment from 12 million to 24 million.
“We’ve never been through a loss in affordability like the expiration of the enhanced tax credits,” Altman said.
Congress could decide in September whether to extend the subsidies. Without action, California consumers will lose $2.1 billion in enhanced credits.
Ariana Brill, a certified agent who assists clients with Covered California enrollment, said the impact could be significant. “We’ll see rates go up. We’ll see assistance go down. And the net premium, the consumer’s take home price, is going to go up considerably,” Brill said. She added that many of her 2,600 clients will face higher costs, with some expected to switch to cheaper, less comprehensive plans or drop coverage.
“For most people, affordability is a huge part of their decision making. Very few of us have the luxury of buying things without looking at the price,” Brill said.
California has allocated $190 million to maintain subsidies for members earning up to 150% of the federal poverty level, or about $23,000 for an individual and $48,000 for a family of four. However, the measure falls short of the $2.1 billion loss. Covered California projections suggest that as many as 600,000 people could lose coverage, leaving behind an older, sicker population that would drive costs higher.
“With those lower utilization people leaving the marketplace, which leaves only the high cost users in the pool, it drives up premiums for those who are left,” said Matthew McGough, policy analyst for KFF’s Affordable Care Act program.
McGough noted that increased health care use and higher prices already drive yearly rate hikes. Factors include an aging population and widespread use of expensive drugs such as Ozempic and Wegovy for chronic conditions. Insurers also cite tariffs on drugs and devices, eligibility changes in Trump’s budget, and inflation.
Nationally, the median premium increase for 2026 is projected at 18%, with 4% linked to subsidy losses, according to KFF. “It’s definitely a significant factor this year and that along with the general environment of uncertainty are what is pushing these rates above what we’ve seen in the past few years,” McGough said.
