Americans in the largest health insurance market could see their premiums double in price virtually overnight, depending on what Congress does over the next few days.
Politico reported Friday that hundreds of thousands of people in California could see a significant spike in their health insurance premiums at the end of the month, due to the possibility of both a federal government shutdown and a funding bill being passed without an extension of Affordable Care Act (ACA, or Obamacare) subsidies. When open enrollment begins in November, those buying health insurance in the Golden State could experience significant sticker shock should those subsidies not be renewed.
"It’s going to cause a lot of grief, a lot of anxiety," Martha Santana-Chin, who is the CEO of the L.A. Care insurance plan, told Politico. "Quite frankly, there’s not a whole lot we can do about that if people just simply can’t afford to pay."
Because the subsidies keep plans affordable, those subsidies expiring could lead to as many as 400,000 Californians — almost a quarter of all enrollees in the Golden State – dropping their health insurance plans over a matter of months. This would cause premiums for those still on their insurance to spike, as most people who drop their insurance are typically younger and healthier. With that population gone, the risk pool for insurers automatically becomes older and sicker by default.
Jessica Altman, who is the executive director of Covered California (the state-run health insurance exchange) said there is roughly $190 million set aside to help state residents cover insurance funding gaps. However, she lamented that even that amount would be a drop in the bucket compared to the estimated $2.5 billion in lost funds should Congress not extend the ACA subsidies.
"I feel very privileged to be in a state that’s putting that amount forward for affordability, particularly in the context of a challenging fiscal situation in the state budget," she said. "But we shouldn’t pretend it’s going to fully fill the hole ... we will lose a lot of people."
There could be even greater numbers of people dropping off of the insurance rolls in the coming years, thanks to language in President Donald Trump's "One Big Beautiful Bill Act." That law will make it so Americans have to manually opt into insurance coverage, as opposed to the current system that automatically enrolls Golden State residents. Politico reported that roughly 70 percent of Covered California customers were automatically enrolled.
Republicans have indicated a willingness to discuss extending the subsidies, though not as part of the must-pass funding bill due on Trump's desk by Tuesday. The subsidies will permanently expire by the end of the calendar year if no action is taken.
Click here to read Politico's full report.