Californians enrolled in Obamacare plans will see much higher premiums.

Californians renewing their public health plans or who plan to sign up for the first time will be in for sticker shock when open enrollment begins Saturday. Monthly premiums for federally subsidized plans on California’s covered exchanges — often referred to as Obamacare — will rise an average of 97% by 2026.

The skyrocketing premiums come as a result of a dispute at the center of the current federal government shutdown, which began on October 1: a budget standoff between the Republican majority and Democrats over whether to keep Biden-era tax credits, whether to expand health care affordability to millions more Americans, and whether to keep affordable monthly insurance policies for current insurers. About 1.7 million of the 1.9 million Californians in the California Covered Plan currently benefit from the tax credit.

Open enrollment for next year runs from November 1 to January 31. This is traditionally the period when members compare options and make changes to existing plans and when choosing new members.

Only this time, the government shutdown has created uncertainty about the fate of the subsidies, which were first introduced during the COVID-19 pandemic and which keep policy costs low, but will expire at the end of the year if lawmakers in Washington do not act to extend them.

California window shopping on the consumer home page of the exchange has to make some tough decisions, said Jessica Altman, CEO of Covered California. The loss of tax credits for subsidized premiums only adds to what can already be a complicated, time-consuming and frustrating process.

Even if the subsidies remain, premiums for plans offered by Covered California are set to increase by about 10% by 2026, due to increases in drug prices and other medical services, Altman said.

Without the subsidies, Covered California said its members who receive subsidies would see their monthly premiums increase by $125 a month, on average, by 2026.

Organization projects that cost increases Many Californians will simply go without coverage.

“Californians will face a double whammy: premiums will go up and tax credits will go away,” Altman said. “We estimate that about 400,000 of our current enrollees will be unenrolled and effectively priced out of the health insurance they have today. This is a devastating outcome.”

In fact, the premium spike threatens to lock out the very Americans that the Affordable Care Act of 2010 — President Obama’s signature domestic policy win — was meant to help. This includes people who earn too much to qualify for Medicaid but who either have too little income for a private plan or do not work for an employer who pays a portion of the premiums.

It’s a wide swath of California — including many bartenders and hairdressers, small business owners and their employees, farmers and farm workers, freelancers, ride-share operators, and those working multiple part-time gigs to make ends meet. The policy change will also affect Californians who use the health care system more often because they have ongoing conditions that are expensive to treat.

By raising the tax-credit eligibility threshold to include Americans who earn more than 400% of the federal poverty level, the Biden-era subsidy at the heart of the budget impasse has brought an estimated 160,000 additional middle-income Californians into the system, Covered California said. The enhanced subsidy saves members about $2.5 billion annually in out-of-pocket premium costs, according to the exchange.

California lawmakers have attempted to provide some relief from Covered California premiums by allocating an additional $190 million in statewide tax credits recently in next year’s budget for individuals earning up to 150% of the federal poverty level. It would keep monthly premiums in line with 2025 levels for a single person making $23,475 a year, or a family of four bringing in $48,225 a year, and provide a partial subsidy for individuals and families making slightly more.

Altman said state tax credits will help. But this may not be enough. Projections from the Urban Institute, a nonprofit research group and think tank, also show a significant decline of about 400,000 registered members in Covered California.

The national outlook is even worse. The Congressional Budget Office warned Congress nearly a year ago that if the increased premium subsidies were allowed to expire, the number of uninsured would only grow by 2.2 million nationwide in 2026 — and by an average of 3.8 million Americans each year from 2026 to 2034.

Organizations that provide affordable Obamacare plans are preparing for California to pull out of the system if the expanded subsidies disappear.

LA Care, the nation’s largest publicly operated health plan, offers California coverage policies to 230,000 very low-income people. About 90% of Covered California consumers they work with receive subsidies to cover their out-of-pocket health care insurance costs, said LA Care CEO Martha Santana Chin. “Until something drastic happens … a lot of these people are going to be out of their coverage,” Santana Chin said.

That outcome, she said, would be far-reaching—thanks to two factors: human behavior and fundamental economics.

If more and more people choose to go without insurance, more and more people will end up visiting hospital emergency rooms for non-urgent care, disrupting and overwhelming the health care system.

Health care providers will be forced to address the rising medical costs of the uninsured by raising the premiums they bill insurers for patients with private plans. This means that Californians who are not covered by California members and no longer receive federal health care assistance will eventually see their premiums rise as well, as private insurers pass any additional costs on to their customers.

But right now, with subsidies ending soon and recent changes to Medicaid eligibility requirements threatening to push some low-income Californians out of the system, both Altman and Santana-Chain said their main concern is for those who don’t have alternatives.

In particular, they are concerned about people of color, who are disproportionately represented among low-income Californians, according to the Public Policy Institute of California. Any increase in out-of-pocket insurance costs in the coming year can put a strain on a family’s budget.

“$100, $150, $200 — that makes sense for people living on a fixed income,” Altman said. “Where does that money come from when you’re living paycheck to paycheck?”