Our Shared Economy | June 22, 2026
Health Insurance Premiums on the Rise
By Heidi Young
Rising Covered California health insurance premiums are reducing household disposable income across Silicon Valley — placing a drag on consumer spending that is dampening business activity, eliminating jobs, and eroding public revenues.
For millions of Americans navigating the rising cost of everyday life, health insurance has become one more expense that keeps getting harder to afford. The expiration of the federal Enhanced Premium Tax Credit (EPTC) on December 31, 2025, has contributed to a 30% year-over-year increase in the average net health insurance premium (gross premium less subsidy) for those who purchase their health insurance on California’s health insurance marketplace, Covered California.
The EPTCs were originally part of the American Rescue Plan of 2021, and later extended by the Inflation Reduction Act of 2022, to provide financial help for buying health insurance through the Affordable Care Act Marketplaces. At their inception, EPTCs substantially improved affordability and increased enrollment in Covered California; from 2021 to 2022, the number of policy subscribers increased by over 500% from nearly 12,000 to almost 74,000, and net premiums decreased by 11% when adjusted for inflation.
Covered California policyholders across the income spectrum took a financial hit when the EPTCs expired at the start of 2026. The hardest hit were the 20% of enrollees whose households earn more than 400% of the federal poverty level ($84,600 a year for a household of two) and were no longer eligible for the tax credit. The remaining 80% of enrollees — households earning between 100% (138% is the Medi-Cal eligibility cutoff) and 400% of the federal poverty level — still qualify for federal subsidies, but at reduced levels with required premium contributions rising at every income bracket.
The expiration of the EPTC is just one piece of a larger affordability puzzle. Even with the tax credits in place, net premiums through Covered California rose steadily from 2022 onward. Adjusted for inflation, the average net premium (excluding subsidy) increased by nearly 70% between 2022 and 2026. The sharpest single-year jump came between 2025 and 2026, when the expiration of the EPTCs contributed to a 30% increase.
What does this mean for the regional economy? The cumulative increase in net insurance premiums has decreased household disposable income by $104.9 million. The effects of reduced consumer spending are estimated to shrink total industry revenue by an additional $13.9 million and eliminate more than 52 full-time equivalent jobs across sectors as varied as housing, healthcare, restaurants, and retail.
The fiscal implications for local and state governments add another layer to the economic damage. Tax revenues are estimated to decline across the board. Combined, city and county governments in Santa Clara and San Mateo counties could face an estimated $0.5 million decline in tax revenues. In addition, State of California tax revenues could decline by $0.5 million.
Underlying all of these figures is a shift that the numbers alone don't fully capture. As premiums have risen, many Covered California enrollees have moved to lower-tier plans to control their monthly costs, which generally means they are accepting higher deductibles and greater out-of-pocket exposure in exchange for a lower premium. California state subsidies have partially bridged the gap left by the federal EPTC expiration, stabilizing renewals, although new enrollment has fallen. The effects of residents downgrading plans or dropping coverage altogether (and paying California’s tax penalty at tax filing time), and/or deferring medical care for financial reasons add an unquantifiable impact.
Notes: Health insurance enrollment and renewal data are from Covered California and reflect the open enrollment period for each year as of February 1. These are “net” plan selections, which are defined as the subset of consumers who, as of the end of open enrollment, still had an active or pending enrollment. This means that among consumers with a plan selection, those who have terminated or been canceled for nonpayment by the time of the report date are excluded, while others who have not yet paid, but whom the issuers have not yet canceled for nonpayment, are included. There may be data lags and ongoing reconciliations between Covered California and health plans. All enrollee numbers are rounded to the nearest 10 consistent with Covered California’s privacy policy, and as a result, grand totals shown may differ slightly from individual totals due to rounding.
Net premiums were inflation-adjusted to 2026 dollars using the Bay Area consumer price index for all urban consumers from the Bureau of Labor Statistics (annual averages for years prior to 2026 and the month of April for 2026). The average number of members per policy has been consistently between 1.3 and 1.4 since 2022. For the purposes of this analysis, households with two persons were used to determine the household income thresholds for Medi-Cal eligibility (less than 138% of FPL) and the loss of EPTC for households with income greater than 400% of FPL.
The loss in household disposable income was distributed across households based on the number of households in each income range, excluding Medi-Cal eligible households with adjusted gross income less than 138% of the FPL (less than $29,864 for a household of two). A weighted household income distribution was used, excluding the lowest income households to distribute the impacts in IMPLAN. There was a slight variation between the ACS household income range categories and IMPLAN’s ranges, where ACS includes households $50-75k and IMPLAN is $50-70k, and ACS $75-$100k, whereas IMPLAN is $70-100k.
About the Author
Heidi Young is a senior researcher at Joint Venture Silicon Valley. You can learn more about Heidi on her bio page.
