The recent increase in health insurance premiums has left many families grappling with unexpected financial burdens. In California, the annual cost of health insurance is set to rise by approximately $4,200 for families of four, creating significant concerns for millions of enrollees.
Jorge Destrade, a 58-year-old movie grip from Echo Park, expressed his frustration upon learning of the new rates. He stated, “I’ve got to answer a lot of questions I really wish I didn’t have to deal with.” Destrade, who has been focusing on retirement savings after overcoming health issues, noted that the increase “doesn’t help” his situation.
This change affects around 2 million people in California and approximately 24.3 million nationally who purchased insurance through the Affordable Care Act (ACA). In California, this program is known as Covered California. Most of these enrollees relied on enhanced federal tax credits to subsidize their premiums, which came to an abrupt end on January 1, 2024.
The discontinuation of these subsidies, alongside rising costs driven by inflation, has resulted in substantial increases in health care expenses for many. A recent study by the Public Policy Institute of California indicated that individuals earning up to $62,000 in areas like Los Angeles and Orange counties will see their insurance costs climb by about $1,100 annually. For a qualifying family of four earning up to $128,000 in the same regions, premiums could rise by as much as $4,300.
In stark contrast, some regions in northern and central California are facing even steeper hikes. The report highlighted that certain counties could experience average increases of approximately $11,000 annually, with the most significant spike occurring in San Benito County, where families might face an increase of around $13,700.
A national survey conducted by the nonprofit health research organization KFF anticipates that health insurance rates across the United States may increase by about 114% by 2026. Despite these alarming figures, ACA plans typically remain more affordable than non-subsidized options for those without employer-provided insurance or who do not qualify for Medicare or Medicaid.
While some subsidies are still available—including a state fund of approximately $250 million and about $2.5 billion in federal aid that continues to be provided—these are not sufficient to offset the rising costs for many enrollees. For the lowest-income individuals, premiums can still be as low as $10 per month, according to Covered California. However, the escalating rates are compelling many to reconsider their insurance options altogether.
The Bay Area News Group reported a significant decrease in statewide enrollment, citing a drop of about 31% from the previous year. Judy Sherman, a web designer from Stanton, indicated her likelihood of forgoing insurance this year. At 34 years old, she faces a difficult decision as she balances financial obligations. “I can’t afford what I do qualify for,” she remarked, adding that she finds the situation “a scary choice.”
The future of health insurance subsidies remains uncertain. Although there is potential for a revival of these subsidies in Congress, the political landscape has proven contentious. The enhanced subsidies were part of a debate surrounding the “One, Big, Beautiful Bill Act”, signed into law on July 4, 2023. This spending plan, which reduced social spending while cutting taxes for high earners, relied on the cessation of health care subsidies.
Republicans supporting the spending bill argued that the enhanced health subsidies were too costly to maintain, while Democrats contended that these subsidies are vital for working- and middle-class families. The deadlock led to a government shutdown lasting a record 43 days.
Currently, negotiations over federal subsidies are ongoing in the Senate, but progress appears slow, with disagreements over issues like abortion funding hampering discussions. It remains unclear whether a vote to restore subsidies will occur this year.
For individuals like Destrade, the reality is stark. The new insurance rates mean an additional $350 each month, bringing his family’s premium to approximately $940 per month. “I’ll figure it out,” he said, “but I can’t take another jump like this.” He expressed concern for his children, stating, “If either of my kids were in the workforce right now, they’d really be hurting.”
As families across California and the nation confront these rising costs, the broader implications on health care access and financial stability are becoming increasingly apparent.
