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The U.S. Congress adjourned for its holiday break without taking action on legislation to forestall the expiration of tax credits that help subsidize the cost of health insurance premiums under the federal Affordable Care Act.
The expiration of those tax credits on Dec. 31, combined with the absence of legislation to take the place of that financial assistance, has created cost uncertainty for health insurance customers.
State officials say that’s a major reason why new enrollments in Covered California, the state’s insurance marketplace under the federal Affordable Care Act (also known as Obamacare), are significantly lower than a year ago.
“The early signs we are seeing are new enrollments,” Jessica Altman, Covered California’s executive director, said in an interview with the Central Valley Journalism Collaborative. “It’s down about 30% from the same time last year. Last year was a really high and strong year, but it’s also the lowest we’ve seen since at least 2021 in terms of new enrollment.”
The Affordable Care Act originally included tax credits to subsidize health insurance premiums for households earning up to 400% of the federal poverty level. The tax credits were expanded in 2021 as part of COVID-19 relief legislation for people or families with incomes above that level, and capping the out-of-pocket cost of premiums at 8.5% of income.
But that expanded subsidy program came with a Dec. 31, 2025 expiration date.
Open enrollment for Covered California continues through Dec. 31 for coverage that begins Jan. 1. For coverage starting on Feb. 1, enrollment is available through Jan. 31, so there remains time for people to sign up, Altman said.
“There’s not really another explanation for (enrollment) being lower than normal in other years other than the enhanced premium tax credit expiration,” Altman said. “That could be people who are waiting and watching and hoping the prices change, and planning to come in but haven’t made the decision yet.”
About 2 million California residents purchase health insurance through Covered California. The vast majority of those are people whose employers don’t provide health coverage to employees, self-employed business owners, freelance “gig economy” workers, and people who make too much money to qualify for Medi-Cal, the state’s incarnation of the federal Medicaid program for low-income residents.
As of July 2025, about 202,000 residents in the San Joaquin Valley, from San Joaquin County in the north to Kern County in the south, were enrolled in Covered California. More than 90% have at least part of their costs for premiums subsidized by tax credits.
Earlier this year, Covered California projected that its subsidized enrollees in Valley counties would experience large increases to their monthly health insurance premiums if the enhanced tax credits expired:
- Fresno County: Average increase of 160%.
- Kern County: Average increase of 160%.
- Kings County: Average increase of 147%.
- Madera County: Average increase of 139%.
- Merced County: Average increase of 388%.
- San Joaquin County: Average increase of 129%.
- Stanislaus County: Average increase of 112%.
- Tulare County: Average increase of 140%.
Despite the expiration of the enhanced credits, lower-income Covered California members would continue to benefit from the standard level of Affordable Care Act credits.
While new enrollments are down so far, the effects of higher rates and reduced subsidies for renewing Covered California enrollees are still unclear. Altman said that’s because people have more options open to them besides either renewing or going without coverage.
Many of the insurance providers that sell coverage through Covered California offer different tiers of insurance plans with different monthly premiums, different levels of coverage, and different deductibles for covered services.
“Renewals are looking stable right now,” Altman told CVJC. “We’re seeing some people come and actively shop, maybe change their plan, or say, ‘No, I really still want the one that I had.’”
“The most common version of that is someone who is choosing a plan that has a lower premium but a higher deductible, higher cost sharing,” she said. “There are trade-offs there.”
“The silver lining is that a person who at least right now is saying, ‘My intent is to maintain health insurance (but) I feel like I have to choose a health insurance plan that has a lower cost,” Altman added.
But there is concern that the ongoing political controversy in Congress over the expiration of the tax credits is causing people to sit on the sidelines and take no action to enroll or renew.
The expiration of the tax credits was a key sticking point in the logjam between Republicans – who have narrow majorities in both the House of Representatives and the Senate – and Democrats who stand to gain ground in the 2026 midterms.
That failure to compromise led to a shutdown of the federal government from October into November. The shutdown ended without any agreement on extending the tax credits, save for the promise of a future vote on an extension.
“The consumer awareness of what is happening, and why, is higher than I would have thought,” Altman said. “This is the first time there’s been such confusion in the midst of open enrollment when people are actually tuning in and having a decision to make.”
An extension of the tax credits is not the only proposal being bandied about in Washington. President Trump and some Republicans in Congress have instead called for providing money directly to consumers rather than tax credits through the Affordable Care Act.
Whether those alternative proposals would provide the same financial benefit to consumers, or what kind of restrictions would be imposed on how the money is spent by consumers, remains to be seen.
“Unfortunately, if there’s any certainty right now, it’s that there’s no guarantee that Congress is going to get anything across the finish line” before the drop-dead enrollment deadline of Jan. 31 for Affordable Care Act coverage that would begin on Feb. 1, Altman said.
But she added that if Congress does manage to extend the expiring tax credits without any structural changes, Covered California would be able to quickly reopen its enrollment for people to realize the savings from the subsidy.
If, however, there are substantial changes to the tax credit program, or different ways of providing some level of direct financial relief to consumers, it could take considerably longer for that to be passed along to enrollees. “We will figure it out, but it could take a lot more time,…” Altman said. “It’s not easy to put the toothpaste back in the tube, as one would say.”
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