Federal cuts, reversals upended California healthcare in 2025

The Brief

  • In Washington, a dispute over whether to renew enhanced premium subsidies that help keep Affordable Care Act marketplace insurance plans affordable prompted the longest shutdown in history.
  • Absent federal action, hundreds of thousands of people could be priced out of Covered California insurance in 2026.
  • On affordability, Gov. Newsom delivered on his promise to cut down the cost of insulin. In 2026, diabetics will be able to purchase long-acting insulin pens at pharmacies for $11 a pen.

SACRAMENTO, Calif. After a decade of expanding health coverage and safety net programs, the Golden State took a sharp detour in 2025. As federal funding reductions and policy changes rippled through the health care system, California confronted service cuts, coverage losses and growing uncertainty.

During the summer, a congressionally-approved spending plan slashed nearly a trillion dollars from the Medicaid program over the next decade. Funding cuts and new rules – such as work requirements – are expected to push 3.4 million Californians off their Medicaid coverage as changes take effect.

In Washington, a dispute over whether to renew enhanced premium subsidies that help keep Affordable Care Act marketplace insurance plans affordable prompted the longest shutdown in history. Absent federal action, hundreds of thousands of people could be priced out of Covered California insurance in 2026.

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