Californians Are Paying for Health Insurance They’ll Never Use—Is Your Plan a Money Pit?

Despite the loss of federal subsidies that previously lowered costs for millions, California's private health insurance marketplace has shown remarkable resilience this enrollment season. A total of 1.9 million Californians renewed their health plans or selected one for the first time, reflecting only a 2.7% drop compared to last year. However, a closer analysis reveals that many Californians are making compromises in order to maintain their coverage.

Specifically, more enrollees are opting for "bronze-level" plans, which generally have lower monthly premium costs but come with higher deductibles and copayments. These plans cover just 60% of medical expenses, compelling enrollees to pay the remaining 40%. One in three new enrollees chose bronze plans for 2026, up from one in four the previous year, according to data from Covered California. Additionally, 130,000 Californians renewing their coverage switched from silver or higher-tier plans to bronze plans, signaling a shift towards more affordable options amid rising costs.

“Many Californians see the value in remaining covered, but they had to make sacrifices and shift to lower-tier plans. We see it as a commitment to health and the value that Covered California provides,” said Jessica Altman, executive director of Covered California.

While these bronze-level plans offer some peace of mind, the higher out-of-pocket costs may deter individuals from seeking necessary care. Miranda Dietz, director of the Health Care Program at the UC Berkeley Labor Center, noted, “Those out-of-pocket costs do impact people’s decisions to get care, so that’s worrisome as well.”

A significant factor contributing to this shift is the expiration of enhanced premium subsidies, which previously allowed many individuals earning above 400% of the federal poverty level—$62,600 for individuals and $128,600 for families of four—to qualify for assistance. With Congress opting not to extend these subsidies at the end of last year, many are either opting for lower-tier plans or dropping their marketplace plans altogether. Specifically, out of 224,000 middle-income enrollees expected to renew, 22% canceled their plans, and new sign-ups in this income bracket saw a staggering 59% decrease compared to the previous year.

The crucial question now is whether those who renewed their coverage or newly signed up will continue to pay their premiums. Covered California anticipates a clearer picture of enrollment stability will emerge around April. “Once you actually face the prospect of paying that premium and the stress that puts on your budget, it’s entirely possible that some of those folks may fall off, and the (enrollment) numbers might go down,” Dietz warned.

Affording Care: A Growing Stress Point

It remains uncertain whether those who canceled their marketplace health plans are enrolling in alternative types of insurance. Data from Covered California over the last five years indicate that 10% to 14% of individuals who terminate their plans report becoming uninsured. The enhanced premium subsidies from the Affordable Care Act, initially enacted in 2021 as part of the federal COVID-19 response, significantly reduced insurance costs for millions of Americans, particularly middle-income earners, by introducing a premium cap of 8.5% of income. With these enhancements now gone, premiums have risen an average of 10%.

Lower-income enrollees still maintain eligibility for standard federal premium aid that has been available since the ACA marketplaces launched. Additionally, California has allocated $190 million in 2026 for state-funded tax credits aimed at individuals earning up to 165% of the federal poverty level—$25,823 for individuals and $53,048 for families of four—providing an average of about $45 per month in assistance.

The termination of enhanced federal subsidies coincides with a broader trend reflected in polls indicating that health care costs are increasingly becoming a source of stress for Californians. A recent survey conducted by the California Health Care Foundation found that seven in ten Californians feel that health care expenses impose financial strain on their households. Additionally, four in ten respondents reported having medical debt, while six in ten admitted to skipping necessary care due to costs. Notably, eight in ten Californians emphasized that making health care affordable is an “extremely” or “very” important priority for state officials and lawmakers in 2026.

As California navigates these challenges, the emphasis remains on ensuring that residents can access the care they need without facing insurmountable financial burdens.