Covered California, the state’s health insurance marketplace, has hit a record 1.8 million enrollees and the number could climb higher ahead of a Jan. 31 open enrollment deadline, due in large part to enhanced subsidies that have made plans more affordable.
But the state’s progress in extending health coverage to all residents could come to an abrupt halt as the second Trump administration takes power alongside a Republican Congress whose leadership has long been hostile to the Affordable Care Act, the 2010 federal law also known as Obamacare.
Top of mind for Covered California officials is the looming expiration of the additional federal subsidies for health insurance approved by Congress in 2021 as part of a covid pandemic relief package. That resulted in lower premiums for people around the country — especially middle-class households — who buy health insurance through the exchanges established by the Affordable Care Act.
“Whether there will be action to extend the enhanced subsidies — that’s a big impact that we are closely tracking,” said Covered California Executive Director Jessica Altman, who noted the program had about 1.5 million enrollees prior to enhanced subsidies.
Republicans have criticized the cost of the subsidies, and it’s not clear they’ll renew them.
Without an extension, researchers at the University of California-Berkeley Labor Center estimate, Covered California premiums for subsidized enrollees would soar by an average of $967 a year beginning in 2026, and an estimated 69,000 Californians would lose their insurance.
California took its own steps last year to make coverage more affordable, eliminating deductibles and reducing other out-of-pocket costs on all mid-tier policies known as “silver” plans.
However, the state’s health care spending is likely to face fresh pressure if Republicans in Washington follow through on long-standing designs to cut funding for Medicaid, the health insurance program for low-income Americans, known in California as Medi-Cal. In addition to bolstering Covered California, the state has also aggressively pushed to expand Medi-Cal, including to immigrants living in the U.S. without authorization, and now spends $161 billion a year on that program, about half paid by the federal government.
About 144,000 of Covered California’s 1.8 million enrollees as of Dec. 14 are first-time buyers, and nearly 90% of all enrollees qualify for financial help. Covered California has extended the enrollment period to March 8 for residents in Los Angeles and Ventura counties due to wildfires, and has also issued extensions related to the bird flu and an earthquake in Northern California.
Low-income residents pay little or nothing for monthly premiums, while for those earning more, premiums are capped at a percentage of household income. With the enhanced federal subsidies, no one is required to spend more than 8.5% of their income on premiums, provided they stick to a silver plan. Such plans, however, can have smaller provider networks and significant out-of-pocket costs.
According to Covered California, the average monthly premium is $136 for those who receive subsidies, two-thirds of whom pay $10 or less a month. But people with higher incomes can end up paying significantly more. For example, a family of four making $200,000 in the Los Angeles area would pay well over $1,000 a month for a silver plan, according to a calculator for estimating costs.
While federal and state subsidies have significantly boosted the amount of assistance available, the underlying cost of insurance has continued to go up. Covered California premiums are up by 7.9% on average for 2025, but the extra subsidies shield most enrollees from the increase.
“You end up with people’s out-of-pocket spending probably being lower than we’ve seen,” said Dylan Roby, a professor of health, society, and behavior at the University of California-Irvine. “That doesn’t necessarily mean that premiums are going down. It just means that the state or federal government is paying a larger share of premiums on behalf of enrollees than before.”
Neither Trump nor incoming congressional leaders have given clear signals about how they view the future of the subsidies, but both have a history of seeking to repeal and weaken the Affordable Care Act. House Speaker Mike Johnson has vowed “massive reform” of the health care law, though without offering specifics.
Experts including Roby say Republicans could extend the subsidies to avoid an outcry from consumers, health insurers, hospitals, and others who have benefited from them. Enrollment in marketplace plans is especially high in Republican-controlled states that have not expanded Medicaid, because it offers low-income people a way to access affordable health insurance.
“I don’t think Republican House members are that inclined to make all of their constituents’ health insurance premiums go up,” Roby said. “I’m kind of optimistic that [the subsidies] will be renewed.”
But uncertainty over the future of the subsidies, even if they eventually get renewed, could affect the cost of marketplace plans, said Rachel Linn Gish, communications director for Health Access California, a consumer advocacy coalition. That’s because insurers are already starting to plan their rates for next year and will likely price in the risk of nonrenewal, she said.
“We are going to be fighting for the next year to try to save those enhanced subsidies and subsequently all of the other frameworks and financing of the Affordable Care Act,” Linn Gish said. “Because if any of that gets rolled back, people will lose health care coverage.”