On January 15, 2026, President Trump announced the Great Healthcare Plan, a federal initiative aiming to reduce health care costs and improve transparency. The plan is scheduled for rollout in 2026 and includes proposals such as changes to prescription drug pricing and restoring cost-sharing reductions (CSR) for insurers.
This development follows the expiration of enhanced Affordable Care Act (ACA) premium tax credits on December 31, 2025. These credits previously made health insurance premiums more affordable for many Californians. Without them, enrollees in Covered California may see their premiums increase.
The Great Healthcare Plan outlines several core elements. One proposal is the restoration of CSR payments, which are federal subsidies that help lower out-of-pocket costs for consumers. According to the plan, reinstating these payments could reduce premiums by 10% to 15%. Another component involves linking U.S. prescription drug prices to those paid in other countries, using the lowest international price as a benchmark.
Additionally, the plan suggests sending subsidy money directly to individuals through health care savings accounts rather than paying insurers. However, Congress has not yet determined eligibility criteria or whether these accounts would replace or supplement current premium tax credits.
Hospitals and insurers accepting Medicare or Medicaid would be required to post prices prominently under new transparency requirements. Insurers must also disclose claim denial rates, overhead costs, and coverage details.
Questions remain regarding protections for preexisting conditions, marketplace stability, and how quickly the plan can be implemented.
For California residents specifically, Governor Gavin Newsom has allocated $190 million in state funding aimed at protecting low-income earners from increased costs due to the expiration of enhanced premium tax credits. This funding is available for individuals earning up to $23,475 per year or families of four earning up to $48,225 annually.
Medicare beneficiaries could see lower prescription drug costs under most-favored-nations pricing rules included in the plan. However, there are no major changes proposed for Medicare Advantage or supplemental coverage structures.
The impact on small business health insurance remains unclear since no new tax credits or significant modifications have been detailed for small businesses so far. Still, increased price transparency may assist employers when comparing coverage options for employees.
Medi-Cal eligibility remains unchanged under the new plan. California continues providing free or low-cost health coverage through Medi-Cal for residents with limited income and state-funded assistance supports those earning up to 165% of the federal poverty level.
Several trends are shaping California’s health insurance market alongside this federal announcement:
- Federal policy is shifting toward value-based care that rewards patient outcomes instead of service volume.
- Telehealth benefits introduced during the pandemic continue as standard offerings.
- Insurance rates are expected to rise overall despite state efforts targeting affordability for lower-income groups.
- Regulations enforce parity between mental health services and physical health coverage.
- Preventive care provisions under ACA will remain unchanged; services like annual checkups and screenings stay free of charge.
Covered California plans will still be offered across four metal tiers: Bronze (60% coverage), Silver (70%), Gold (80%), and Platinum (90%). Enhanced Silver plans funded by the state provide additional support for qualifying low-income enrollees. Traditional ACA subsidies remain based on income but offer less assistance than previous enhancements.
No grandfathering provisions exist under the new plan—current plans must meet ACA standards including essential benefit coverage and protections for people with preexisting conditions. Open enrollment runs through January 31, 2026; future periods may shift earlier in November–December windows.
Health experts recommend gathering necessary documentation before enrolling—such as Social Security numbers, proof of income like pay stubs or tax returns, household size information, and details about any existing employer-sponsored insurance or public programs—to facilitate application processes while awaiting further guidance from Congress on final implementation steps.
