TL/DR –
Covered California, the state’s health insurance marketplace, saw a 30% drop in new enrollees after federal healthcare subsidies expired in December 2025. Experts attribute the decline to premiums doubling, even tripling or quadrupling, for middle and low-income families who relied on the subsidies to afford their monthly premiums. This drop in enrollment is expected to place financial stress on healthcare providers forced to scale back services due to more uninsured and fewer paying patients.
Insurance premiums soar
Covered California, the health insurance marketplace in the state, experienced a 30% drop in new enrollments following the expiry of federal health care subsidies in December 2025. This decline is largely due to a significant increase in premiums. According to state officials, for some middle and low-income families, this led to a “tripling or a quadrupling” of monthly premiums.
Impact in California
Several Bay Area counties, including Contra Costa, Alameda, and Santa Clara, reported a sharp fall in enrollments. The average Covered California plan doubled in cost for 2026, as per state officials. Premiums for middle-income households and adults nearing Medicare eligibility saw substantial increases, from $186 to $365 per month on average.
A Systemic Impact
The exit of healthier individuals from insurance coverage could put a financial burden on the healthcare system. Providers may need to reduce services due to an increase in uninsured patients and a decrease in paying ones, potentially affecting their sustainability.
The ACA Marketplace
Improved tax credits under the American Rescue Plan in 2021 reduced health insurance premiums for enrollees in the Affordable Care Act (ACA) marketplace. These benefits were particularly important for people without employer-sponsored or other government coverage.
US Healthcare costs double over two generations
The US’s healthcare expenditure has doubled over two generations, reaching around 18% of gross domestic product (GDP) currently, as per Dr. Neal Mahoney, an economics professor at Stanford University. While the government covers about 50% of healthcare costs, it means fewer resources for other significant endeavors.
Impact on families, businesses & the job market
Rising healthcare costs also significantly impact families, small businesses, and the labor market. Families are shouldering higher premiums and increased deductibles. Small businesses, suffering from financial strain, may limit employee wages, reduce hiring, or stop providing health insurance. All these factors can contribute to a stagnant labor market.
High cost of medication
High medication costs are another significant issue. Americans pay between 4 and 8 times more for the same brand-name drugs compared to those in other high-income countries. The pharmaceutical industry taking advantage of the patent system is a major reason for this.
Healthcare Affordability in 2026
A significant number of Americans fear they might not afford healthcare costs in 2026. This concern arises from the expected increase in costs over the coming months. However, the majority of Americans want Congress to take more action to lower medication prices and reform the patent system.
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