What did the federal government do that affects Californians’ access to healthcare?

A very harmful federal budget bill became law on July 4, 2025. The name of the law is called the One Big “Beautiful” Bill Act, sometimes called OBBBA. Before it was a law, it was called H.R. 1. We call it the New Budget Law in this resource. The law was written and passed by Republican Senators and House Representatives. It was signed into law by President Trump. The law tells the federal government how much money it can spend, and what to spend it on.

The New Budget Law makes many changes to the federal budget that hurt low-income people, people with disabilities, students, children, immigrants, and Black, Brown, Tribal, and rural communities.  It takes away healthcare from millions of people by cutting Medicaid and Medicare by more than $1 trillion – the biggest cut in history.

Further, on June 20, 2025, the Department of Health and Human Services (HHS) published a Final Rule. The Final Rule makes it much harder to get insurance through the Affordable Care Act Marketplace (ACA Marketplace). The Final Rule was written and released by HHS leadership appointed by the Trump Administration.

Together, the changes make it much harder for Californians to get and keep their health coverage:

3.4 million Californians might lose their Medicaid coverage because of the New Budget Law. Medi-Cal is California’s state Medicaid program.
Up to 660,000 Californians who get their healthcare through the ACA Marketplace could lose their insurance coverage because of the New Budget Law and Final Rule. Covered California is California’s ACA Marketplace.

The changes mean that healthcare costs will go up for everyone – even for people who do not have Medi-Cal or insurance through the ACA Marketplace.

How and when will the changes affect Californians’ access to healthcare?

The Final Rule and the New Budget Bill make many big changes to the healthcare system. People in California who will be most impacted by these healthcare changes are people on Medi-Cal and Covered California health plans, and immigrants. The changes have different start dates, and some things have already started to change.

Some parts of the law are in place right now. One example is the increased Immigration and Customs Enforcement (ICE) activity in our communities. This is because the New Budget Law gives ICE more money to deport our immigrant neighbors, friends, and loved ones. The new law is already excluding certain immigrants from Medicare and Supplemental Nutrition Assistance Program (SNAP or food stamps). Before the New Budget Bill, it was already very hard for immigrants to get public benefits. The New Budget Bill made it even harder.

Some of the changes will not go into effect until later. For example, the New Budget Law requires that certain people on Medicaid work, volunteer, or attend school 80 hours per month. This kind of requirement has caused a lot of problems in states that have tried it before. The work requirement will go into effect later, on January 1, 2027 (unless there is an extension). The New Budget Law also requires that certain Medicaid recipients have their eligibility “redetermined” every six months instead of once a year. This means that some people on Medicaid will have to show that they are eligible for Medicaid more often. This will go into effect later, on December 31, 2026. DREDF will share more information about these changes soon.

The biggest changes to healthcare that are happening right now affect Covered California.

What is Covered California?

The ACA Marketplace is where individuals and small businesses can get affordable private health insurance. In California, the ACA Marketplace is called Covered California.

What do the changes do to Covered California?

The federal changes are making health insurance sold on Covered California much more expensive. They are also making it much harder to get and keep insurance through Covered California.

Higher Cost

People who get their insurance from Covered California will see the amount they have to pay each month to get health insurance go up by as much as 75%. Low income people purchasing coverage on Covered California will see the biggest cost increases.

Right now, people who have an annual income above 150% of the federal poverty level, or who have less income but are ineligible for Medi-Cal, can get tax credits to help them pay for health insurance in the ACA Marketplace. These tax credits are called Enhanced Premium Tax Credits. Over 20 million people in the United States get these tax credits to help pay for their insurance. The New Budget Bill did not give any money to the federal government to keep offering these tax credits. The tax credits will expire on December 31, 2025.

If the Republican controlled Congress does not act to extend the tax credits, out-of-pocket costs for insurance will skyrocket. The average person could be paying 75% more for their monthly insurance payments.
Even if the federal government decides at the last minute to keep giving tax credits in the ACA Marketplaces, the uncertainty they have introduced to the marketplace has led to higher prices.  On August 14, 2025, Covered California released its expected insurance rates for 2026. Rates increased by 10.3% on average.

Aetna Health Insurance chose to leave the marketplace because of the high costs. 21,000 Californians who have Aetna plans through Covered California will have to sign up for a new plan.
The health plans that had the highest rate increases were Valley Health Plan (21%) and Inland Empire Health Plan (17%).

Harder to Get Financial Aid

The changes also make it harder for people to show that they are entitled to financial support to cover their premiums. People who sign up for Covered California insurance plans can get different levels of help with their payments based on their income. To show that you can get a certain level of help or tax credit, you need to show that your yearly income level is below a certain amount. Covered California can sometimes know your income level by looking at your taxes. Sometimes your tax information might not be available, or it might be hard for you to get.

Before, Covered California allowed you to sign a document called an “Attestation of Income” that says that the income you report is accurate. The Final Rule took away this option on August 25, 2025.
Now, when you apply for Covered California, you will need to have all your documents ready to prove that you make less than a certain amount. If you aren’t able to prove it right away, you will not be able to get help with your premiums. You will have to pay the full amount for your health insurance.

Fewer Safeguards

The changes get rid of safeguards that used to help people enter and stay in coverage provided through Covered California, starting on August 25, 2025:

Before, there was a rule in place that prevented insurance companies from refusing to cover you if you missed an insurance payment in the past. Now, if you miss an insurance payment, you will now have only three months to pay it before you could get kicked off your insurance. If you get kicked off, you will have to wait until the yearly Open Enrollment Period to re-enroll.

This change will hurt low-income people who find it hard to make their insurance payments. As health insurance costs go up, more people will get kicked off their insurance because they can’t afford to make the payment.

Before, there was a time frame every month when people who make below a certain amount and are eligible for Covered California could sign up for health insurance. This was called a Low-Income Special Enrollment Period. The Final Rule got rid of the Low-Income Special Enrollment Period.

Getting rid of the Low-Income Special Enrollment Period means that poor people have fewer opportunities to sign up for Covered California health insurance.

Now, some people will have to wait another year to apply if the Open Enrollment Period has passed.

People who are going through a big life change, like getting married, having a baby, or losing a job, can still apply to Covered California under other special enrollment periods. But without a major life change, people will only be able to sign up during the Open Enrollment Period that happens once a year.
Note: American Indians and Alaskan Natives can sign up for Covered California insurance at any time.

Right now, California has a three-month Open Enrollment Period from November 1 to January 31. But the Final Rule requires all states to limit their Open Enrollment Periods to two months starting in 2027. This means people will have less time to sign up for health insurance through Covered California.

Dreamers Excluded

People who are part of the DACA Program are called Dreamers. Dreamers were only recently recognized as being eligible for ACA Marketplace insurance. The new federal rule changes that and excludes Dreamers starting on August 31, 2025. This change could stop 2,300 Dreamers in California from getting health coverage. Covered California has already sent notices to Dreamers to tell them that they will lose their health insurance soon.

This policy is part of a terrible attack on immigrants by the Trump administration. Ripping healthcare away from immigrants is cruel. It hurts our communities by making it harder for people to get the healthcare they need.

What can I do?

Resources

Resources by Covered California

Other Resources

DREDF is working on more resources to help you understand the ways that your healthcare might change because of the Final Rule and the New Budget Law.