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Covered California projects enrollment declines and budget tightening after federal changes
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Summary
Covered California staff told lawmakers they expect enrollment to drop after expiration of enhanced subsidies and HR1 rule changes, project a preliminary 2026 budget near $481 million and plan monitoring and participation‑fee adjustments to maintain solvency.
Covered California deputies Kathleen Webb and Jim Watkins told the subcommittee that federal changes under HR1 and the end of enhanced premium tax credits led to substantial uncertainty for the exchange.
Watkins said preliminary planning projects enrollment declines (an estimated 11% drop in FY 2026) and forecasts enrollment around 1.5 million over the projection range, down from 1.9 million in December 2025. Covered California projects a preliminary operating budget near $481 million (down from $496 million the prior year) and is evaluating short‑term participation‑fee adjustments and other measures to avoid operating deficits as enrollment and revenue shift.
Officials emphasized the exchange is self‑funded (no state or federal operations funds), prepares audited financial statements, and is presenting a proposed budget to its board in May with action anticipated in June; specifics remain subject to board approval and final modeling of enrollment and premium trends.
Members asked what consumers should expect for premiums; officials said premium growth of 8–10% in some lines was plausible given enrollment mix changes and pricing dynamics but that federal tax‑credit structure will blunt some consumer price effects for eligible households.
