California is preparing for a serious health care crisis as Congress fails to extend federal subsidies that help nearly 2 million residents pay for their health insurance through the Affordable Care Act (ACA) marketplace. The enhanced tax credits, which have helped reduce insurance costs since 2021, will expire on December 31.
Without these subsidies, monthly premiums for Covered California customers are expected to double. Experts warn this will force many people to drop their health insurance, strain emergency rooms, and push local governments to absorb rising medical costs.
Enrollment Already Dropping Sharply
Covered California reports that new sign-ups are already down by more than 30% compared with this time last year. Many families say they simply cannot afford rising premiums without federal support.
Dr. Rachel Ruiz, a pediatric gastroenterologist, described the situation as dangerous. She said, “This is a choice between prevention and catastrophe. Without these tax credits, practicing medicine will feel like working in quicksand.”
Why the Subsidies Are Ending
The subsidies were first added in 2021 to help Americans afford rising insurance costs during the pandemic. They currently keep coverage affordable for millions of middle-income families nationwide.
But Congress remains deeply divided. Republicans blocked a federal spending plan this fall after Democrats insisted on renewing the subsidies. GOP leaders argue that extending the aid covers up failures in the ACA system.
Failed Senate Votes Increase Uncertainty
On Thursday, the Republican-controlled Senate failed to advance two competing bills:
- A Democratic plan to extend subsidies for three more years
- A Republican proposal to offer health savings accounts instead of renewing subsidies
With no agreement in sight and only weeks left in the year, hopes for a solution are fading fast.
California Leaders React
Senator Alex Padilla criticized Republicans for offering what he called “junk insurance alternatives” instead of helping families keep their existing plans. He warned that many households will soon be forced to choose between paying rent or paying for health care.
Covered California estimates that 400,000 people will lose coverage entirely next year. Another large group is shifting to cheaper plans with fewer benefits and higher out-of-pocket costs.
Ripple Effects Across the Health System
Hospitals and doctors fear that uninsured patients will delay treatment until their conditions become emergencies. This could overwhelm emergency rooms, increase wait times, and raise costs for everyone.
Rural hospitals, many already struggling financially, may be hit especially hard. County-run hospitals expect taxpayers to bear the cost of treating uninsured patients.
“Everyone will feel the impact, no matter what insurance you have,” Dr. Ruiz said.
Panic and Division in Congress
As the deadline approaches, moderate Republicans in the House are trying to join Democrats in pushing new proposals that would extend the subsidies for one or two years. These plans include new income limits and anti-fraud measures to win bipartisan support.
One proposal, from Rep. Sam Liccardo (D–San Jose) and Rep. Kevin Kiley (R–Rocklin), would limit subsidies to households earning less than six times the federal poverty level and reduce inflated payments to insurers.
But neither Republican nor Democratic leaders are backing these middle-ground plans. GOP leadership wants the subsidies to end completely, while Democrats want a simple three-year extension with no major changes.
Deep Political Divide Blocks Progress
House Speaker Mike Johnson accused Democrats of refusing to fix what he called a “broken system.” He argued that extending subsidies hides the true cost of the ACA.
Democrats counter that ending the subsidies will push millions off their insurance and destabilize the health care system.
Conclusion
California is bracing for a health care disaster as the expiration of ACA subsidies draws near. With Congress deeply divided and time running out, millions of residents could face unaffordable premiums, reduced insurance options, and overcrowded emergency rooms. The decisions made in Washington over the coming weeks will have long-lasting impacts on California’s health care system, families, and communities.
