Chief executives at Minnesota’s four largest nonprofit health insurers are warning premiums could spike and thousands of residents could lose coverage in 2026 if the state’s Congressional delegation doesn’t help save enhanced federal tax credits that subsidize coverage bought through the public MNsure exchange.
The extra federal subsidies are set to expire at the end of next year, which will coincide with the end of state funding for a different program that also controls costs for people shopping in the individual market through a mechanism called reinsurance.
As a result, premiums could jump 55% and about 93,000 Minnesotans could lose coverage in 2026, according to a study commissioned by the health insurers that was published earlier this year. The impact would come solely in the individual market, where roughly 3% of state residents buy coverage from private health plans governed by the Affordable Care Act.
“Losing enhanced tax credits and the state reinsurance program at the same time would have a compounding and dire effect on the cost of health insurance in the state and the number of Minnesotans who would lose health insurance coverage,” the CEOs at Blue Cross and Blue Shield of Minnesota, HealthPartners, Medica and UCare wrote lawmakers on Nov. 7. An October letter to Gov. Tim Walz from the Minnesota Council of Health Plans, the trade group for these insurers, asserted “this ‘double whammy’ will result in a record number of Minnesotans losing coverage.”
The extra tax credit dollars first became available through federal stimulus legislation passed in 2021. The subsidies were then extended through the end of next year by the federal Inflation Reduction Act of 2022, which also is adding to medication benefits in Medicare health plans and letting the government negotiate prices on a limited number of drugs.
Meanwhile, in 2018 Minnesota implemented its reinsurance program, which has been credited with reducing premiums by about 15% to 20% per year in the individual market.
Both programs are focused on a slice of the health insurance market that’s received a tremendous amount of attention from politicians and policymakers over the past decade. This is the “Obamacare” market, including MNsure in Minnesota, where people under age 65 who are self-employed, don’t receive job-based benefits, or have too much income for the state’s MinnesotaCare program can buy subsidized coverage .
About 186,000 people in Minnesota this year were insured through the individual market, including 134,000 who bought health plans via MNsure, where many tap federal tax credits to discount premium costs. Of the MNsure enrollees, tens of thousands of people would see their costs go up, the state agency says, if the enhanced federal tax credits expire at the end of 2025.
