TL/DR –
The HR 1 bill signed by President Trump on July 4, 2025, ended billions in enhanced subsidies for health insurance, significantly impacting millions of poor, working, and middle-class citizens who relied on these subsidies for medical care. The original tax credits were introduced in 2010 through the Affordable Care Act (Obamacare) and were strengthened in 2021 to help offset the economic damage of the COVID pandemic. The removal of these subsidies has led to skyrocketing health insurance premiums and has been especially damaging to Black communities and other minority groups who already face disproportionate health and economic challenges.
Massive Healthcare Premium Increases for Black Californians Following Tax Cuts
When President Trump signed HR 1 (aka the “One Big Beautiful Bill”) into Independence Day 2025, it was a moment of alarm rather than celebration for Rhonda Smith, executive director of the California Black Health Network. This sweeping federal legislation slashed taxes considerably for America’s richest, while simultaneously discontinuing health insurance subsidies worth billions of dollars that millions of low-income, working, and middle-class Americans relied upon to afford medical care. The effects of these cuts were implemented from the start of the following year.
Smith explained that the elimination of these subsidies has caused a sharp rise in premiums, placing a significant financial burden on individuals and families. “Now we’re seeing premiums escalate because the subsidies are disappearing,” Smith said. “And someone can go from paying $60 a month under Covered California [the state’s private insurance marketplace] paying with the subsidies to now maybe $600 or $900 a month premium, depending on their family situation. So when we talk about, not only accessibility and availability, but affordability, HR 1 one has changed all of that.”
A Blow to the Affordable Care Act
Introduced as part of the Affordable Care Act (aka Obamacare) in 2010, tax credits designed to aid people in affording medical insurance and care were bolstered in 2021 to combat economic fallout from the COVID pandemic. The Inflation Reduction Act extended these enhanced credits through the end of 2025. These increased financial aid amounts benefitted those already eligible for the ACA marketplace – and crucially, they expanded eligibility to include middle-income individuals who exceeded 400% of the federal poverty guidelines.
As per an article by KFF (formerly Kaiser Family Foundation), enrollment in the marketplace escalated from approximately 11 million to over 24 million people following the implementation of these credits – a more than twofold increase. The vast majority of these new enrollees depended on the enhanced premium tax credits.
Impact on California’s Black Health Network
The California Black Health Network, a Black-led organization based in Sacramento, is dedicated to advancing health equity for African Americans and Black immigrants. This is achieved via outreach, education, and advocating for solutions to issues residing at the intersection of racial, social, economic, and environmental justice.
Poverty and lack of access to healthcare are strongly linked, with academic studies highlighting a vicious cycle where poverty leads to poorer health and care access, and ill health exacerbates poverty through lost earnings and high costs. This cycle disproportionately affects children, minority groups, and low-income populations. A lack of comprehensive insurance coverage and significant financial costs act as barriers, resulting in poorer patient outcomes, delayed treatment, and increased prevalence of chronic diseases.
“We spend the most on health care with worse outcomes compared to other developing countries,” Smith said. “The system was already broken to begin with. And so I think that is part of the reason why we are continuing to see health disparities in Black and brown communities.
“You know, there have been many programs, policies, research projects, money spent, addressing health disparities for the last few decades, but we’re still dealing with the problem.”
The Effects of HR 1 on Medicaid and Medi-Cal
HR 1, backed largely by Republican congressional sponsors, has slashed nearly $1 trillion from Medicaid and its Californian counterpart, Medi-Cal. Both programs provide healthcare for low-income individuals. “These two federal changes are happening in the context of … a health care affordability crisis in this state,” said Kristof Stremikis, director of market analysis and insights at the California Health Care Foundation.
Prior to the passage of the “Big Beautiful Bill” and the subsequent cutting of subsidies, data from the California Health Care Foundation revealed that half of eligible Californians were avoiding healthcare due to cost. Stremikis explained that, “Every other person in this state didn’t go to the doctor when they were sick because they thought it was going to cost too much. They didn’t fill a prescription. They’re cutting bills in half. They may be not doing a test or a treatment that their doctor is recommending because it costs too much. That was the situation before any of these developments at the federal level and these federal developments are only going to make that situation worse.”
How Californians Are Affected
In a survey conducted by the California Health Care Foundation in 2024, Californians expressed their worries about affording basic living expenses as well as healthcare costs. Approximately two thirds of respondents expressed their worry about being able to afford unexpected medical bills and out-of-pocket costs. The only expense Californians worried about more than this was gasoline or other transportation costs. More than half of respondents were “very” or “somewhat” worried about affording care for aging or disabled family members (58%), monthly health insurance premiums (55%), and prescription drug costs (53%). Over half of Californians also voiced their worries about various expenses unrelated to healthcare: 56% for rent or mortgage, and 59% for food or groceries and monthly utilities such as electricity or heat.
The price of medical care, including services provided as well as insurance, drugs, and medical equipment, has risen by 121.3% since 2000, according to a report by health policy advocates Peterson-KFF. This is significantly higher than the 86.1% increase seen in the cost of all consumer goods and services during the same time frame.
HR 1: The Implications for Medi-Cal and Covered California
Medi-Cal covers over half of California’s children, 2.2 million seniors and people with disabilities, one in five working Californians, and millions more low-income individuals. HR 1 is projected to slash $30 billion a year in federal funding from Medi-Cal, according to the California Budget and Policy Center. This reduction is expected to limit access to care and potentially push some safety net providers into grave financial difficulty, leading to a rise in the uninsured population and an increase in unpaid medical bills.
Meanwhile, almost 2 million Californians were enrolled in health coverage through Covered California in 2025. This state marketplace, created in 2010 following the passage of the ACA, partners with private insurers to offer healthcare policies. Nearly 90% of enrollees in Covered California received some level of financial aid, but this support is now being reduced. Enrollees are expected to lose $2.5 billion in federal subsidies that expired at the end of 2025.
Living with the Consequences
Ocea Johnson, a 64-year-old enrollee of Covered California from Sacramento, is feeling the pinch. Suffering from osteoporosis and high blood pressure, Johnson is living with her two adult sons to save money due to the rising cost of living. She is a retired custodian and now works as an in-home caregiver, also caring for one of her disabled sons. She joined Covered California upon retirement and worries about the escalating premiums. “Everybody is struggling one way or another — housing, medical, food,” Johnson said. “The premiums going up is not good, especially when the cost of living keeps going up.
Single mother and director of a nonprofit advocating for families with special needs children, Felicia Ford, has also experienced hardships. After losing her home during the Eaton Fire, she is now renting a home while waiting for compensation from her home insurance company to rebuild. Ford, who is on Medi-Cal, expressed concern about the additional challenges presented by the federal financial cuts: “So we’re already at bare bones. I can’t imagine what things are gonna look like when they cut back even further.”
While health advocacy organizations work together, share information, and lobby elected representatives to improve the health care system, Ford’s advice is simple, “Yeah, stay healthy. That’s my recommendation.”
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