RELEASE: All 2.37 million Californians in the individual market will face higher premiums if Congress does not act by 2025
FOR IMMEDIATE RELEASE: September 25, 2024
Media Contact: Julie Light, julie.light@berkeley.edu, 415-215-5737
More than 2 million Californians could see health care premiums rise if Congress does not act
New research from the UC Berkeley Labor Center and UCLA Center for Health Policy Research
Berkeley, CA–New research from the UC Berkeley Labor Center and UCLA Center for Health Policy Research finds that if Congress does not extend the expanded subsidies implemented under the Inflation Reduction Act of 2022, some 2.4 million Californians in the individual market—most of whom are enrolled in Covered California—would face higher health insurance premiums.
The Inflation Reduction Act enhanced federal premium subsidies for health insurance purchased in health insurance marketplaces like Covered California. It also removed the income cap on who could receive federal subsidies, enabling more middle-income families to qualify. But these enhancements are scheduled to expire at the end of 2025. If subsidies return to their original levels, the UC team projects that in 2026:
- 1,558,000 Californians would pay an average of $967 more per year but maintain coverage despite having their subsidies reduced or eliminated.
- 740,000 Californians enrolled in unsubsidized coverage would pay an average of $253 more per year due to the worse risk mix of the individual market if the IRA subsidies were eliminated.
- 69,000 additional Californians would become uninsured.
The researchers caution that in some cases, consumers who lose subsidies would face increases that are much higher than the average of $967 per year. Older enrollees in high-cost areas with relatively modest incomes would be particularly hard hit. For example, if subsidies were eliminated, a 60-year-old in San Mateo with income just over $65,000 would need to pay $12,830 more per year for a silver plan. Even if they switched to the lowest-cost bronze plan with significantly higher copays and deductibles, they would still need to pay $7,433 more per year in premiums.
“Even though most of my health insurance is subsidized by Covered California, there was a scary moment earlier this year when my premium temporarily spiked dramatically — by more than five times what it had been,” said Nieves Rathbun, owner of By Nieves, a small skin care product enterprise in Eureka. “I’m happy to say that my insurance premium today is zero, but if Congress doesn’t reauthorize the healthcare subsidies provided by the Inflation Reduction Act, I’m worried I might see another rapid jump in my costs like the one I experienced a few months ago. If that happens, it would have a dramatic effect on my family and my business.”
In recent years, California has provided additional financial help to Covered California enrollees to lower out-of-pocket costs and eliminate deductibles. But this progress on affordability is threatened if the enhanced federal subsidies in the IRA are not renewed, according to Miranda Dietz, UC Berkeley Labor Center researcher and lead author of the report.
“The state-level funding is great, but it’s equivalent to only a tenth of the federal dollars Covered California enrollees receive through the IRA. If Congress doesn’t act, Californians will be forced to make trade-offs and it will exacerbate Californians’ existing struggles to afford health care,” said Dietz.
The report concludes that all 2.37 million Californians who rely on the individual market will suffer in 2026 if Congress does not act to preserve this significant health care affordability improvement. Read the full report.
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