These 3 things may affect your health care coverage

While work requirements and enrollment verification for Medicaid recipients got the most attention during the debate over President Trump’s domestic policy bill, there are other factors in play that will take effect much sooner that could cost thousands of San Diego County residents their health insurance.

Some of the most immediate health care-related changes are not actually listed in the bill, while those that are covered in detail will not materialize until late 2026 at the earliest.

Three items in particular are on the horizon, affecting both Medi-Cal recipients and those who buy coverage on the nation’s health insurance exchanges such as Covered California.

Asset test

Increased costs in the Medi-Cal program, and a projected decrease in revenue from taxes charged to managed health care plans, has caused California to pursue several cost-saving measures, and one of the largest is the return of the program’s “asset test,” which was eliminated in 2024. As the phrase implies, this test requires applicants to prove that they do not have more resources, both cash and property, than is allowed by statute. Those who go over specified limits are denied coverage unless they spend down or otherwise divest their assets. 

A state memo indicates that “asset limits will be set at $130,000 for one person and $65,000 for each additional person,” starting on Jan. 1, 2026. Exempt assets, those that the state does not count in its assessment of whether an enrollee’s resources exceed prescribed limits, include their principal residence, one vehicle, personal effects and some types of retirement accounts that generate “regular payments” to their beneficiaries, according to a state Medi-Cal document. Balances in bank accounts, cash, other property and vehicles all count toward asset limits, according to the State Department of Healthcare Services.

Philip Lindsley, an attorney with the San Diego Elder Law Center, said that since the asset test went away 18 months ago, many have managed to access Medi-Cal benefits, especially in-home supportive services, while maintaining resource levels greater than those now to be reinstituted.

“A lot of people who would not have qualified for Medi-Cal before, starting Jan. 1, will lose their Medi-Cal,” Lindsley said. “I don’t know the exact count, but there are many people on Medi-Cal programs right now that are going to have to go through an analysis of assets, and many of them will lose their coverage.”

This, too, has nuance. Many current Medi-Cal enrollees will not face an asset test until their annual renewal period, which is generally the month before they originally applied for coverage. The rules are also different for those who qualify for Medi-Cal through the modified adjusted gross income, a method generally assigned to those younger than age 65.

Covered California subsidies

Another significant threat comes to those with subsidized coverage offered through the nation’s state-run health insurance exchanges. Individuals and families receive income-based subsidies to buy commercial health insurance plans, which would not be affordable otherwise. This system was created by the Affordable Care Act in 2010, which many call “Obamacare.”

“One of the biggest looming challenges is one that was never even part of this reconciliation bill,” said Larry Levitt, executive vice president for health policy at Kaiser Family Foundation. “Enhanced premium tax credits are slated to expire at the end of this year. If they’re not extended out of pocket, premiums will rise by an average of more than 75% and millions are projected to end up uninsured.

“That would happen on New Year’s Day 2026.”

If would be a major blow for San Diego County residents who buy coverage through Covered California, the state’s health insurance exchange.

According to the exchange’s 2025 open enrollment report, 92,000 of the 110,290 exchange policies active in San Diego County received a subsidy of some amount. The average policy receives a subsidy of $660 per month, driving average monthly premiums from $886 to $225. For the average family, then, elimination of subsidies would amount to increasing costs by nearly $8,000 per year.

As a June 4 analysis from the U.S. Congressional Budget Office notes, the current subsidies expire on Jan. 1, 2026, and as yet, Congress has not taken action to renew them. Without subsidies, the CBO estimates that 5.1 million Americans will drop their coverage.

Provider tax

The bill includes a rather obscure change that could cost the state millions of dollars and, in turn, a reduction in services.

Federal law currently allows states to charge medical providers and health insurance companies annual fees known as provider taxes to help defray the cost of their Medicaid programs, pumping more cash into the system than would otherwise be available. Increasing the overall amount of local Medicaid funding allows states to “draw down” more federal revenue. That is because Medicaid operates on a formula where dollars allocated locally are matched by the federal government. Increasing the size of the local contribution, then, grows the amount of match that comes from Washington. Fewer federal matching funds means less revenue available to pay for the services that Medi-Cal provides.           

Under the new legislation, states are forbidden from creating new provider taxes or increasing those that already exist. And, in a few year’s time, the bill calls for gradual reduction of provider taxes. However, Alice Burns, director of KFF’s program and Medicaid & Uninsured, said earlier this month that the bill also takes immediate action against some existing provider taxes, including California’s Managed Care Organization tax, a 3.9% levy on revenue that Medi-Cal managed care companies receive from the Medi-Cal program. Private companies manage the benefits of most Medi-Cal recipients, handling the benefits of 94.6% of the state’s 14.8 million Medi-Cal enrolled, according to the state’s most-recent statewide enrollment report. Managed care companies use primary care doctors to refer patents to specialists when necessary rather than allowing them to see any doctor that accepts Medi-Cal.

Because the tax is mostly paid by Medicare Managed Care companies, and not more broadly by all insurance companies, it runs afoul of technical changes.

“Nearly all of the tax is being paid by the Medicaid MCOs and, under the reconciliation bill, that is no longer permissible and that takes effect immediately,” Burns said.

It is not clear exactly what the effect of this change will be in the coming months. Cancellation of this tax would appear to require further service cuts to make up for the lost matching funds from the federal government, though neither the governor’s office nor the state Department of Health Care Services confirmed that fact.

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