Covered California rates to jump nearly 10% as thousands struggle to afford coverage

Health insurers are raising rates for plans sold through Covered California by an average of nearly 10% for the second consecutive year, compounding the loss of federal subsidies that sent customer payments soaring as marketplace enrollment fell by about 170,000 people.

Rates for plans sold through Covered California, the state's health insurance marketplace under the Affordable Care Act, commonly known as Obamacare, will rise an average of 9.9% in 2027, officials said Monday. That follows a 10.1% average increase that took effect Jan. 1, 2026. The back-to-back increases are the steepest seen in the state marketplace in nearly a decade and will likely coincide with rising costs for other forms of health insurance.

Of the nearly 10% increase in Covered California rates next year, about 8 percentage points can be traced to rising healthcare spending and 2 percentage points to federal policy changes, according to Covered California officials.

Hospitals, doctors and prescription drugs are all becoming more expensive, according to experts, state officials and insurers. The expiration of $2.5 billion in annual federal assistance for Covered California customers is also putting pressure on the market, insurers say, as healthier customers drop coverage and leave companies with a smaller pool of people who are sicker and costlier to insure.

The actual increases seen by health plan buyers in 2027 will vary depending on their plan and income. Low-income and some middle-income Californians can still qualify for government subsidies that reduce their costs.

Although underlying rates rose about 10% in 2026, customers' monthly payments nearly doubled on average after the federal assistance expired. Covered California will send letters in October informing buyers about their prices and options ahead of the open enrollment period that begins in November.

About 1.8 million Californians buy health insurance through Covered California. They include people who earn too much to qualify for Medi-Cal, are too young for Medicare or lack affordable coverage through an employer, including gig workers and people who are self-employed.

About 10% of those customers will bear the full brunt of the price increases because they earn more than 400% of the federal poverty level and do not qualify for federal or state subsidies, Covered California Executive Director Jessica Altman said. For a single person, that threshold is about $65,000 a year.

"Those people are just being hit incredibly hard," Altman said. "They are the only people in our healthcare system who are expected to pay the full cost of their premium with no support."

Kaiser Permanente's Covered California plans will rise less than the state average, increasing 6.7% in 2027. The nonprofit health giant, California's largest private employer and private health insurer, raised its Covered California rates by 7.1% for 2026. Spokesperson Elissa Harrington said labor and prescription drug costs continue to rise as demand for care also grows.

"We have to adjust rates to cover all these rising costs, but our increases are usually lower than the average rate increases by other health plans," she said in an email.

Anthem Blue Cross, which is a common insurance provider in Northern California, will raise its Covered California rates by an average of 13% in 2027. That follows a 14.5% increase for 2026. A spokesperson for the insurance company declined to comment.

Anthem Blue Cross is a subsidiary of Elevance Health, a publicly traded company based in Indiana.

Cynthia Cox, senior vice president at the independent analysis group KFF, said health plans are largely passing the rising cost of healthcare along to their customers at a time when U.S. health spending is increasing at a historic pace.

Health spending typically rises faster than general inflation, she said. But Cox noted a recent industry estimate that medical costs in the U.S. will jump 9% in 2027, which would be the steepest increase in 17 years. That could make employer-sponsored plans more expensive than usual next year, Cox said.

The California Association of Health Plans, which represents insurance providers, mostly blamed hospital spending for the higher rates. It also pointed to prescription drug costs, including GLP-1 medications used for weight loss and diabetes treatment that have exploded in popularity.

"California's health plans remain steadfast in our commitment to keeping coverage as affordable as possible for California's individuals and families," President Charles Bacchi said in a statement.

The California Hospital Association pushed back on the insurers' explanation.

"Insurance company complaints that 'hospitals are spending more' are simply wrong," said spokesperson David Simon. "Rather, more is being spent for the hospital care that Californians need as our population is aging, sicker, and the cost to provide that care in a high-cost state like California continues to rise."

In 2025, President Donald Trump and Republicans in Congress opted not to extend enhanced assistance for insurance buyers, including people covered through Covered California. Insurers say the expiration forced them to raise rates further because healthier people tend to drop their insurance when it becomes more expensive, leaving companies to cover a smaller pool of customers who are sicker and costlier.

The policy also dramatically increased the amount customers pay. Californians received $2.5 billion less in subsidies this year, Altman said, and their monthly premium payments rose by an average of 97%, according to marketplace data.

Covered California had projected that as many as 400,000 Californians could lose their insurance because of the federal policy. The decline so far has been smaller but still substantial.

Enrollment fell by about 170,000 people, or nearly 9%, from 1.94 million in April 2025 to 1.77 million in April 2026, Altman said.

Because experts consider Covered California plans a last resort for people who cannot get health coverage elsewhere, many of those priced out of the marketplace likely become uninsured.

California has blunted the financial burden better than some other states. A Peterson-KFF analysis of 16 states and Washington, D.C., found an average rate increase of 14% for Affordable Care Act marketplace plans next year.

To prevent more buyers from being priced out, Gov. Gavin Newsom and state lawmakers expanded state funding for subsidies this year, setting aside $300 million to help low-income insurance buyers, up from $190 million last year.

A single person earning up to $32,000 a year is eligible for assistance through the state program. Covered California estimates the funding will prevent 90,000 people from dropping their coverage next year.

But that help will not reach Californians above the subsidy cutoff, leaving them to absorb the full 2027 increase or decide whether they can still afford coverage.